Keeping up with the changing dynamics of human resources, traditional ways of operations have slowly began taking a backseat. What also needs to take a backseat, is the age-old method of incentives to do your job. I mean you pay salary, right?
The human endeavor to understand abstract notions of motivation have evidently been tough to crack. What essentially keeps one going? Do rewards motivate better or does the fear of deprivation drive one to give their best? Your sales force is easily the most important team as they directly impact the organization’s revenue. And one thing that troubles all managers, especially sales managers is to keep their sales team thoroughly motivated. A classic reason why most organizations liberally pick the ‘carrot & stick’, ‘only carrot’ or ‘only stick’ approach to motivate their employees. An age-old metaphor used for rewards and penalty, these can be incorporated as a combination or individually, depending on the values and culture of the organization.
Lisa Lai of the Harvard Business School explains this beautifully. ‘The key concept that motivation is less about employees doing great work and more about employees feeling great about their work’.1
On a daily basis, sales representatives are posed with many challenges that most often result in a drop in their motivation levels. Something that an organization cannot afford to bear in the long run. Constantly facing rejection from customers and potential dealers, while facing the brunt of a low economic season, it is necessary to keep the team on their toes, along with making them want to stay longer.
Groundwork & Ground Rules
It is vital to assess your organizations’ values and culture, the beliefs you stand by. Chart out a sales performance curve by calculating each salesperson’s performance against their sales targets, and then create a histogram of the data. This gives you an idea regarding the performance curve of the company.
It Does Ring A Bell
Most performance curves [secretly continue to] follow the classic bell curve logic to segment their workforce, dividing it into top performers, low performers and average performers. It is one of the most recurrently used techniques to understand as well as implement. If you’ve done away with annual appraisals and the bell curve for other departments, why is sales left behind? Is it because at the end of the day, the numbers need justification of some sort? Or is investor pressure driving you to a leaner salesforce and hence, you need to put people off-payroll? In either case, paying more attention to the kind of people you hire i.e. the ones with EQ, might be beneficial.
Doing Great versus Feeling Great
Helping employees understand the context of the work that they are entrusted with and explaining how it matters in the long run is what makes a difference. Identifying challenges and road blocks in a proactive manner. Collaboratively finding a solution to tackle it. A commitment to recognizing and appreciating good work with the focus on self-motivation. It’s all a part of the feel-good factor.
What happens when organizations ‘Cap salespeople’s pay’? “The need for more empirical work is accentuated by the importance of accounting for several important features of real-world compensation schemes in evaluating and optimizing sales-force performance.”2 A ramification that only strengthens the data driven approach, helps decide which segment of performers need a push in terms of motivation. It also outlines what their share of total revenues and sales targets look like. Here are a few of the easiest motivational incentive strategies that can be implemented for them:
More than one set of targets – Setting up a multi-tier target incentive system could motivate the average performers as they have multiple fruits to pick from the orchard. Results show that this method has aided organizations achieve a higher sales revenue.
Appealing prizes and contests – In order to break the stereotype that ‘top performers always take away the prize’, organizations are investing in a version of the multi-target incentive where there are different levels of prizes to ensure that both average and top performers get a chance to win something each.
Periodic bonuses – A study analyses explains that one of the most common carrot used in organizations as a part of compensation is the bonus. But it has also been inferred that quarterly bonuses work better in motivating low performers as opposed to annual bonuses. It even increases productivity by 10%.
Social pressure amidst peers – Encouraging healthy competition ensures that the talent pipeline is of the best quality. By doing so the overall productivity and performance curve begins to improve. Recognition programs further facilitate comparison and boost competition among employees.
Beyond just commissions – Most sales teams work on a commission basis where they receive a given cut of the revenue once they achieve their target. In order to encourage and recognize star achievers, commissions can be extended to every target achieved over and above the stipulated numbers.
Best Selling Author Paul Marciano claims that “Carrots and sticks don’t work.” He further explains this phenomenon via a simple model of ‘RESPECT’.3 Trends still show that most organizations opt for the ‘carrots more than stick’ approach. How relevant is this in the current scenario, is another debate in itself. Research indicates that people fear losses more than the desire to gain something. So, what does one emphasize on?
It can only be concluded that various organizations have strategized their systems differently and none of it is fixed. We live with a dynamic, constantly changing work force and what matters most in this set up is to ensure many methods are experimented with in the most unbiased and efficient way and then, followed by adapting a data driven approach to implement the best incentive programs.