What makes an effective incentive program?

Sales incentives are the most popular tools for motivating agents. Representatives want to increase their income by meeting their quotas and hitting other important goals. However, companies need their incentive compensation management (ICM) teams to ensure that the prizes actually push employees to new heights.

There are some universal truths when it comes to designing an effective incentive program. Vendors want to reward positive behaviors and keep their salespeople striving toward the correct objectives. Companies create unique plans for their goals to ensure that their agents are all on the same page. Clear metrics and varying prizes are two features that are found in every incentive system.

Quantifiable metrics
Contemporary Staffing, a recruiting agency, writes that every incentive program needs clear metrics in order to be successful. Abstract points are difficult for employees to track and ultimately cause dissatisfaction within the ranks. Measurable statistics increase the transparency of the initiativeĀ so that workers aren’t kept in the dark as to what behaviors will help them earn rewards.

Modern ICM software from companies like Xactly and Synygy help vendors create transparent programs. Applications can be used to update salespeople on their figures and show them how close they are to meeting their quotas. The software can be automated so that it will update as soon as new deals are finalized.

Transparency and software preventĀ a common problem with incentive programs – complaints about favoritism. When agents cannot monitor their own figures or are not given hard quotas, it seems like the rewards are distributed without rhyme or reason. Ultimately, it seems that managers are giving gifts to their favorite staffers. Managers must create clear objectives and provide analytic tools to demonstrate that every salesperson can earn their incentives and that favoritism does not factor into the equation.

Varying prizes
The Society for Human Resource Management (SHRM) recently reported that top performers should earn higher rewards than their average associates. Incentives should be tied directly to each employee’s sales volume. This ensures that every employee understands that his or her income is predicated on how many goods or services they are able to sell.

Additionally, managers cannot think of every worker as a top performer. According to SHRM, managers are hurting their incentive programs by giving everyone equal pay. The best salespeople are being shortchanged because other staff members are receiving inflated paychecks.