Using incentive programs that move the whole team forward, not just the top!

It’s January in the North Country, as I board the plane I see some familiar faces, executives from one of my client companies.

“So where are you heading?” is the usual question.

“Taking my team to Vegas for a week of golfing!”  he says.

“The whole group or just the top 20%?” I ask.

“Oh it’s wonderful, over 90% made the cut this year based on our production goals, the largest group we’ve ever taken!” (40 sales people on staff)

Apparently our training and their incentive program had a good effect! What about your team’s performance?

Then late last week I had another conversation with another client and discussed how they could set up an incentive program that would work. In the conversation he asked if he should state the bottom one gets fired as a way to put some teeth into the program.

I suggested he not, but rather let’s look at what your real objectives and outcomes are in implementing a program. I found the information and discussion being something many managers struggle with, so here is a recap of that conversation.

Step 1: what is our objective and expected outcomes in implementing an incentive plan? This may be the most important question you have. To often incentives are used as a short term motivator or prod with limited results.

What incentive plans should do is assist in building a strong culture that continues to build the team each year. Here are some questions you might ask yourself:

• Am I trying to motivate one person or an entire group?
• Am I looking short term or trying to build something long term?
• Do I want to isolate the non-performers?
• Can it be equitable to all concerned, or do some have a greater advantage?
• Do I want to build individuals over time with the incentive?
• Am I prepared to pay the bill if they all perform?
• What is it I want to measure and reward?

Also consider some of the following points as you develop your outcomes.

• What you are measuring can make or break a system.
• If it is pure sales volume your may create price cutting just to get volume.
• If you measure only total sales and not have standards in different lines, you may have a huge increase in one area and a drop in several others.
• The measurement should be equitable for all involved, meaning the newest and lowest producer could potentially be the top winner!
• If someone has an area that has limited potential and is going against an area with unlimited potential, why would they bother?
• Does it take into account extenuating circumstances? (Weather, Health,  Disasters)
• Does it allow everyone to win in some way?

Step 2: Understanding the motivational issue. Many times I have talked to managers and sales people that have indicated more money is not necessarily the incentive!

Just recently a sales person who was 3^rd in the nation for his company, left for another position in a different industry. The former employer came back to him with almost 3 times the money and support he had been offered before! His comment;

“It’s not about the money; it’s about my family and not being appreciated! Why didn’t they offer me this before I left if I was worth so much to them?”

Another top producer is very frustrated and looking.

 “I love what I do and the money is hard to walk away from, but the BS is making me old and I could care less about getting up everyday. I don’t like it.”

Two top producers with six figure incomes that indicate “money” is not the issue! So what is the issue in creating incentive plans?

Going back to our conversation with one client, he continually kept saying;

“They’re on commission, why do I have to provide an incentive? Isn’t raising their paycheck by selling more incentive enough?”

Here is the response, the commission becomes an expected issue, and they become comfortable at a given level and tend to stay there for many reasons. Again, money is not always the great motivator and the commission is an internal motivation issue rather than an external.

Well over 90% of our population is hungry for outside recognition and a feeling of belonging to something. Many will do things for a trophy that they would not do for a few extra bucks.

Consider this, why do people join a gang, a church, a club, the bowling league or any type of organization? They want to have a feeling of belonging! If work does not provide this feeling, they will find it somewhere else!

Do you know of people that put more effort and sweat into their bowling or church than they do at work? Are they getting more recognition there than at work?

That is why I put the idea of continuous development being recognized at all levels. Much like the story of the English Lords that bet each other a street urchin from London’s gutters could never act like a princess. A young woman was pulled from street gutter, homeless, uneducated and defiantly unrefined. One year later she was introduced at the royal ball as a princess and no one refuted the claim. The secret; recognition of even the smallest improvement in her abilities.

Could the same work for a sales team or any team! Does your incentive program provide this element?

Step 3: The plan: Here is a sample of what a long term incentive plan might look like.

First our outcome is to develop and continuously move the sales group performance up the ladder each year, thus improving the company growth and market penetration.

We are going to measure a percentage of growth over the past year using profit margin, % of total sales increase and % of product mix in our formula. This will be posted each month with the top producers for that month first as well as a year to date listing.

We will create a sense of belonging and recognition for anyone who meets a minimum number and will do so by creating a series of “clubs”. Each person can earn their way into a given club by hitting a given minimum.

            Platinum 10% increase

            Gold 8% increase

            Silver 5% increase

The big incentive will be given to the top performers in the Platinum group, but each group will receive some type of recognition. (a jacket for each group, special privileges, other recognizable items, etc.) The jacket will give them recognition all year long, provide a sense of belonging to a group and give them a target to get into the next group level.

Those that do not qualify for the lowest group will be provided a coaching program for the year to either get them into a group or repositioning in or outside the company.

During the year various vendors may provide additional short term incentives that may or may not affect the group membership.

Anyone moving up to a higher group level gets a new jacket and other incentives are created for maintaining a group status long term.

If someone would falter and drop to a lower group, they still qualify for that group’s incentive and will most likely be back in the upper group next year.

The real power is that the lower producers, who can not see themselves today as the Platinum group, could see themselves in the Silver which is an obtainable goal. They now have a step incentive which they can climb as their belief grows. Everyone wins including the bottom line!

Even the Silver group is a winner because they have grown their business and thus moved the company ahead.

If you look at successful incentive plans, such as the company in the beginning of the article, you’ll find the elements from this article are part of the plan.

Your challenge, review your incentive plans. How do they address the issues raised here? What could you do to enhance your incentive plans?

Till next week, keep making it the best day yet, as only you can!

Harlan Goerger

For more on what Business Architects can do for your company check out the following sites: www.BusArconline.com www.BusArc.com www.HGoergerassoc.com www.blogBusArc.blogspot.com

Harlan Goerger