What Is Really Going On When Designing Sales Incentive Schemes?

By | March 23, 2010

You would think wanting to create something that was really going to motivate sales people to perform to higher levels than they would ordinarily do would be positive for everyone. And that’s where you would be wrong.

Below we have put together the five most common ulterior motives we have come across when the subject of sales incentive schemes is on Senior Managers’ agendas.

  1. Depressing salespeoples earning capacity. By far this is the most significant (mostly) unspoken driver. We are quite happy for salespeople to earn some bonus/commission … but not too much. And watch out for a bumper bonus year, the next year’s scheme will be all about clawing back to a more ‘reasonable’ level.
  2. ‘As long as they don’t earn more than me’. It’s interesting how often a cap on sales earnings is closely related to a managers pay. We operate a simple maxim – any individual team member can earn more than their manager, but if every team member achieves more than their target none will earn more than their manager (who should be well rewarded for getting every team member above target).
  3. Something that is just achievable. For many organisations ‘stretch’ means getting a lot more sales from the team with as little pay-out as possible.
  4. Complexity that conceals management manipulation of the data.
  5. First past the post systems that set members of the same team against each other, so rather than focusing on beating their targets, they are encouraged to focus on beating each other. Apart for the obvious inward perspective it also creates more losers than winners – not a good motivational move.

If you would like to design a world class sales incentive scheme we can help. Getting the principles right can have a profound impact of the effectiveness of any scheme you might deploy. For more information contact us.

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