Compensation pros, are your sales incentive policies actually driving your best salespeople away? It’s likely, if you aren’t careful, says Chally Group’s Vice President of R&D Sally Stevens.
Even with the best of intentions, you can incentivize your best people to leave, says Stevens. Chally Group Worldwide is a global leadership, sales potential, and performance measurement firm.
Here are Stevens’ top 10 mistakes in incentive contest design that drive the best salespeople away:
MISTAKE 1: Trying to Keep Everybody Happy
Poor performers needn’t be, and probably shouldn’t be, too content, unless they are trainees from whom you wouldn’t expect great results, says Stevens. Prior to the l960’s, little attention was paid to how people felt about their jobs or workplaces. Then we tried various job-enrichment, happy-worker programs to improve working conditions in order to improve output. Most programs failed.
Now, instead of saying, “Happy salespeople make more productive salespeople,” we substitute, “Only productive salespeople should be happy.”
The key is making job satisfaction a result of productivity. In a well-run incentive program, salesperson satisfaction improves as a result of increased efforts and sales. Seldom does job satisfaction lead to increased performance.
MISTAKE 2: Failing to Separate Novices from Veterans
Don’t use the same contest guidelines for both trainees and salespeople, suggests Stevens. During training, a salesperson is still learning how to produce. The points awarded in an incentive contest, then, should be tied to the quality or quantity of the salesperson’s efforts. Award points for the number of calls made, leads followed, or improvements made in product knowledge.
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MISTAKE 3: Negative Reward on High Productivity
Some managers have a hard time believing that anybody who reports to them is worth more than they are. Others believe that increased performance is a result of easier sales because management is doing a better job of advertising and sales support, rather than more effective selling skills. Either way, the managers feel they have to cap a salesperson’s salary and incentives so they won’t become inordinately high. Many top salespeople perceive this practice as unethical, so it is not always wise to ensure that a regional manager wins as much in an incentive program as his best salesperson, says Stevens.
MISTAKE 4: Targeting Prizes Toward the Wants of the Entire Sales Force Instead of the High Performers
Generally, one finds high performers seeking independence vs. security and desiring rewards with some long-term underlying value to them. They usually prefer to satisfy their short-term needs themselves. They want to build long- term advantages, such as hobnobbing with top executives on an incentive trip, that will give them prestige and lead to advancement.
Less effective individuals typically look for short-term rewards and don’t like to worry about their long-term performance. Slanting incentive awards toward top performers may help alter such attitudes among the lower rungs of the sales force. If this doesn’t work, try offering sales education seminars as an alternative incentive to poor performers.
MISTAKE 5: Planning a Contest with No Sales Force Input
When planning an incentive contest, form a committee of sales superstars to help pick the incentives and plot the guidelines for winning. Surprisingly, they will set standards tougher on themselves than managers would. But because they are still members of the rank and file, the entire sales force will usually respect their decisions.
You risk the exact opposite when managers set all the standards and rewards. This is not to suggest that guidelines should not be tied to legitimate corporate goals. It is most probable that the superstars, all goal-oriented people, will include this important consideration in their proposal.
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MISTAKE 6: Leaving Top Management Out of the Plan
Incentives are an important part of the psychological gratification of the salesperson and, therefore, need to be given the recognition and esteem associated with top management. Incentive programs that are cranked out mechanically and anonymously in a staff process are perceived by salespeople to lack status and prestige. At the very least, include comments from the company’s president or chief executive officer in promotional mailings to contest participants, says Stevens.
In tomorrow’s Advisor, more of Stevens’ mistakes that incent top sales people to leave, plus an introduction to the “audit-before-the-feds-do” system for preventing expensive pay mistakes.