Article: Well-designed incentive program pays higher: Srikanth Rajagopalan

Strategic HR

Well-designed incentive program pays higher: Srikanth Rajagopalan

Effective programs motivate people to exceed their targets

Incentives reward a minimum acceptable performance level considering individual effort and external and internal variables


A well designed incentive program pays disproportionately higher as performance crosses 100% of targets - Srikanth Rajagopalan, Senior Sales & BD professional with 14+ years of experience across FMCG, financial services, telecom sectors.

What are the talent challenges facing sales-driven organizations?
One of the main challenges these industries face is the availability of talent. With the economy growing at 8+%, companies are hiring aggressively, especially in customer-facing roles, to help them grow and maintain market share. This war for talent across sectors is creating enormous pressures on hiring managers to quickly fill positions, sometimes even at the expense of a quality hiring process, which creates headaches later on when cultural or role fitment issues surface. Another challenge I see is the growing employee aspirations and shortening attention span. The younger employees seek a fast-track career and a series of 18-24 months stint in any role. This presents a tough challenge for managers to keep employees engaged and motivated while maintaining a robust talent pipeline for the organization.

What does the CEO look for in sales performance? And how does this link to pay?
The way that CEOs look at performance from the sales teams is by measuring reach of the product or service, efficiency based on metrics related to client acquisition, and other standard productivity measures, flexibility and adaptability of channels and finally, the effectiveness of the sales teams to provide feedback to the organization about what is happening at the ground level and how this feedback gets translated into innovation.
Different businesses have different drivers, for example, FMCG tracks width/depth of distribution, replenish frequency, shelf-share, merchandizing, etc. BFSI measures ongoing engagement through spending by card members at merchant establishments. Sales teams therefore have very specific tasks in these industries, and performance is measured accordingly. Usually a company’s revenue targets are broken down by geography/ product-lines and cascaded to sales teams until it translates into individual sales goals. Incentives reward a minimum acceptable performance level considering individual effort and other internal and external variables, for example, instances where unavailability of stock led to sales teams not fulfilling sales quotas, regulatory changes that disrupt business-as-usual etc.
Junior salespeople can have as much as 40% of their total pay variable. And the better designed incentive programs actually payout disproportionately higher amounts as performance crosses 100% of targets. More senior sales leaders earn around 20% of their pay as variable.


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Topics: Strategic HR, C-Suite, Performance Management, #ExpertViews

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