Sales Incentive Programs

Most so called incentive programs are really bonus payments for a job well done based on some standard of performance. A true incentive program needs to motive not just reward. Additionally, the program should not cause unintended consequences that will negatively impact the performance of the organization.

So before you consider implementing the following ideas, make sure the functions that support sales are prepared to deal with the attitude that nothing happens until you sell something.

First – Be sure you are adequately compensating the people who support the sales function. No matter how effective a sales person may be, they do not succeed entirely on their own merits. Therefore, if the results are superior, you may want to establish a bonus program for all contributors. If you do, there is a greater chance that a collaborative environment will emerge, as everyone is recognized and benefits from a team effort.

Secondly – Base the incentive program on receivables not sales. What good is it to reward someone for revenue that is not collected?

Third – Set a time limit when the incentive program will no longer be in place. Incentive programs can become stale and subject to clever employees who game the system. Prepare the staff in advance for an adjustment so that you manage expectations and don’t fall into a reactionary trap where you end up changing incentive plans for the wrong reasons.

Fourth – Communicate, communicate, and communicate some more, in advance and ongoing. If you’re going to keep score make sure everyone knows the rules, what the penalties are for breaking the rules, who is going to keep score, and who is going to referee. Sales incentives should be viewed as a game and you want the winners of the game to benefit the company

Fifth – Make it simple and keep it simple. Everyone should know at any time how they are doing, what they need to do to improve and what they have to gain if they do so.

Sixth - Coach people to be winners. It is foolish to just let people do the best they can. If your company is smart, they will invest in the sales force and do all that is reasonable to train, educate, and coach the sales team to be successful.

Seventh – Avoid compensation envy. As long as the company is making a good profit, don’t strangle the incentive program so that the more one sells the less they can make.

Eighth - Celebrate success. Focus on personal best performance not just the top performer. That way everyone is encouraged to do better without feeling that they let themselves down.

From Michael Salisbury with the Human Resource Alliance (HRA) at www.hralliance.biz