Many organisations are revising their sales incentive schemes in the light of new regulations designed to prevent mis-selling of financial products and to meet the growing need to reward and engage employees more effectively. New Financial Conduct Authority (FCA) rules have hit the finance sector hardest but any business that sells financial products alongside its product or service offerings now has to take great care that it does not incentivise its salespeople by sales figures alone.
HR directors in the retail and automotive sectors, for example, as well as in the financial and other regulated sectors, are reconsidering their sales incentive schemes to reward sales people for customer service, appropriate cross-selling, aftersales and customer retention.
Engagement and retention
At the same time, there is a growing recognition of the need for better engagement of sales people within the organisation, not least to prevent disruptive levels of staff turnover. With the cost of replacing employees who have left now topping £30,000, according to research by Oxford Economics, there is a growing imperative for organisations to engage and retain staff.
Sales incentive schemes still play a vital part in motivating employees, but they have evolved into performance improvement programmes that reward and recognise multiple achievements and behaviours, not just hard sales totals.
HR directors are now working with a broader range of stakeholders, as well as the sales director, to deliver performance improvement programmes. Business development managers, channel managers and a range of line managers may have a stake in schemes that aim to incentivise and develop cultural changes, reward performance and increase accountability.
The traditional leader-board, which rewarded the highest sales figures, is now looking rather limited and old-fashioned as organisations seek to change behaviours from the hard sell to the consultative sell, educate employees more deeply on new products and services and create longstanding relationships with loyal customers.
Sales league tables are evolving into performance hubs, where content delivery and messaging is targeted, Amazon-style, to each individual salesperson visiting the portal.
Top performers who might otherwise be resting on their laurels may be incentivised to boost their performance still further, while lower down the rankings, mid-range performers can be kept motivated with rewards for performance in a particular time frame or for upselling successfully.
Key to the successful design and launch of new sales incentive schemes is to get sales staff on board from the beginning. Sales people who have a stake in the rollout of a new system will be able to do what they do best – sell the benefits of the system to others in the organisation.
An effective new generation performance incentive scheme replaces traditional league tables with a web-based performance hub using the latest graphics and personalisation to keep employees interested. Social and collaborative features combined with e-learning opportunities keep employees visiting the hub regularly. Rewards and recognition will be targeted at people at every level of performance and different rewards and recognition will be tailored to the various demographics of employees.
The latest performance incentive schemes enable HR directors and other stakeholders to analyse data from past and present schemes in order to track the effectiveness of the scheme, make any tweaks that are required and keep the solution fresh and relevant.
Bottom line benefits
There is clear evidence that a well-designed sales incentive scheme is a very effective organisational tool – a managed incentive programme in the automotive sector found that the frequency with which line managers used incentive management tools had a direct impact on the engagement levels of staff. Participants benefiting from the most effective use of rewards and recognition were 27% more engaged. In fact, the IES/Work Foundation report ‘People and the Bottom Line’ found that if organisations increased investment by 10 percent in a range of workplace practices relating to boosting engagement they would increase profits by £1,500 per employee per year.
HR directors who manage to create a new generation sales incentive scheme that engages employees while incentivising a wide range of customer satisfaction outcomes will also see a further major benefit. A culture of rewarding only top sales totals with big money bonuses has cost organisations dear. In contrast, a personalised, granular incentive scheme that incentivises and engages can achieve so much more at a far lower cost – perhaps by recognising employees with a simple semi-automated “thank you” system allowing colleagues to thank each other, through to tailored rewards recognising desirable behaviours.
This article was first published in The HR Director, December 2014.
(Reproduced with permission)