Top 7 signs of your Incentive Plans not working on Employees

Incentive Plans have two parts in them, first is the plan themselves which has rules etc. which is more strategy. First part answers WHAT & WHY of Incentive Plans, lets simply call it as Design. Second is the process part or say, execution part which is more tactical. Second part answers WHEN & HOW of Incentive Plans, lets simply call this as Process. Issue in any of these two parts may significantly bring down the desired results.

Organizations generally have Incentive Policies in some form in place, but its always good to make things better. Let’s talk about when we should start this change.

Look for below signs in your organization when you need to start brainstorming for change in any or both parts of Incentive plans.

1) Your Star performers question whether their targets are achievable.

There are majorly 3 indications for this case:

a) Your star performers are not getting much higher incentives (2x) than average incentive payout

b) More than 50% of your salespeople are not achieving the Threshold i.e. No incentives

c) More than 75% of your salespeople are not able to achieve set Targets

2) Plan communication is launched months after Plan effective date.

3) Salespeople or Sales managers believe that they are getting penalized for things they cannot control.

4) Performance on one component / parameter greatly influences payout in another component / parameter.

5) Sales Managers and Salespeople incentive objectives are not aligned or there is infighting between them on priorities.

Example: Salespeople incentive is majorly based on volume of business whereas Sales Managers incentive is based on profitability of customer. In this case, Salespeople will go for “easy sales”.

6) You have consistent attrition of top performers.

7) Sales managers believe that their incentives are not reflecting their performance or say performance of their territory, their team or product portfolio. This means that Sales Incentive / Sales Commissions or Sales Incentive Plan do not reflect their work.

Now WHAT to do:

You need to start thinking about evolving your Incentive Plans in both Design and/or Process.

Your 90% of the efforts can be saved if you can get any Sales Incentive Management Software. But still 50% of the problems can be solved through right alignment of components / parameters with Sales Incentive Plans.

Also, rather than having couple of Incentive Plans of everyone which brings in generality, try to have different plans for different set of people. This will rightly align differential organization interests with employee output. This can bring great upswing in business results.

Above are two key remedies, but Best Practices of Incentive Plans is different topic altogether and for a separate article.

Till then, Happy Incentivizing!!!

About Varun Gupta

This article is authored by Varun Gupta. Varun is CEO of Atmax Technologies which specializes in Cloud solution of Total Compensation Management and Sales Incentives Management. His interest areas are Sales Incentives, Compensation and Benefits, Sales Enablement/Effectiveness, HR Technology and Entrepreneurship. You may reach him at [email protected]

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