Sales incentive compensation tactic meets mixed response

Offering sales incentive compensation is a great way to encourage more productivity and better performances. At the same time, this kind of reward system can also sabotage output by setting unrealistic goals. Legislators and business leaders are trying to ensure that their targets are in line with attainable outcomes, as these kinds of programs are likely to gain the most adoption and engagement from personnel. However, some entities are coming up with goals that are impossible for staff members to meet, making it necessary for third parties to step in and mitigate employment issues.

Creating successful plans
According to Automotive News, one automaker has suspended its sales incentive compensation program after a new law made it impossible to effectively execute this kind of strategy. The source stated that stair-stepping, a technique that pushes personnel to meet high sales figure expectations, is now suspended at General Motors dealerships across New Hampshire. This is due to a piece of legislation that requires manufacturers and businesses of all kinds to provide more notification and explanation to dealers regarding why new benchmarks are being set and the math behind these determinations.

Such transparency should be expected in any kind of corporation, but GM stated this kind of paperwork would make it difficult for the organization to respond as readily to market changes. Lawmakers said that this will help protect sellers, as some car manufacturers set unrealistic goals and force staff members to act outside the best interest of consumers in order to generate more sales.

Engineering success
Being more intuitive about upcoming sales drives and pushing for better customer engagement should be at the top of every corporate leader's list of priorities. However, they need to be considerate of their workforce's emotional, physical and psychological well being. If firms are setting unrealistic expectations with compensation plans, they may risk adherence and engagement with the stratagem, as well as ongoing retention issues among staff members at all levels.

GM has been a leader in providing rewards for better sales. As the National Legal and Policy Center reported, the firm has used a broad array of tactics, including the stair-stepping principal, to encourage more productivity and award personnel, dealerships and regions for increasing their sales and meeting specified targets. This tactic has helped boost revenue while helping to save the organization money, because GM is able to control how much it pays out to each recipient and thereby can better control its cash flow.