Incentive Tales to Terrify

By Malcolm Fleschner

Steven King may be widely recognized as the fiction world’s "master of horror," but for chilling tales from the non-fiction world of sales incentives, you have to turn to industry experts like Michelle Smith. A vice president of business development for employee recognition solutions provider O. C. Tanner (www.octanner.com), Smith has logged more than 25 years working in every facet of the incentive industry. When asked about the worst incentive programs she’s ever encountered, Smith recalled a computer hardware manufacturer she once worked with that had developed a generous incentive program intended to drive sales of a new enterprise system and away from selling desktops and laptops. Having lined up a broad award selection, posted motivational posters and pumped up the sales team, the company figured the monster sales would roll right in. Unfortunately, she says, that’s not the way it worked out.

"In fact," Smith notes, "sales went down on the new product line, although quite a healthy portion of the budget had been spent on awards. A survey revealed only a small percentage of managers and sales reps were participating in the program and many of the reps expressed great displeasure with the awards. It was at this point that I was asked to step in and take over the program."

Smith says she found a cumbersome paper-based award system that offered no program tracking or measurement, not that there were any clear goals to measure in the first place.

"The goals were vague and managers were rewarding sales of laptops and desktops, rather than the new product the program was established to feature," she says, "so the alignment between corporate strategy and field execution was completely lacking. Few awards were given because of the clumsiness of the system and employees soon lost interest due to the absence of an ongoing marketing strategy for the program. "But the most egregious problem was that managers in different business units were giving vastly different awards for the same results. We found instances of employees receiving movie tickets for the same result that someone else received a one-year lease on a new truck! This created enormous upset due to the lack of parity and fairness, and the program lost all focus on products sales. Instead, participants were requesting transfers to work for the managers that gave the most generous awards."

The mistakes made by this client are not uncommon, Smith says. She suggests that the reason for the program’s failure can be traced back to a lack of diligent preparation at the outset.

"There’s a popular misconception that an incentive program is ‘good to go’ once you’ve gathered the awards, allocated the budget and told the participants what you expect," she says. "Running a successful program shouldn’t be difficult, but it does require some forethought and time and attention along the way. Spending the extra time and money upfront to create a well-structured program that will deliver the results you want to achieve is a very worthwhile investment. The program design should include clearly defined goals and rules for award achievement, an ongoing communications plan, tracking and measurement of program results against the goals and proactive program management to assure the program is performing as designed and to make corrections when needed."

In some cases, however, a spectacular failure can prove more beneficial than merely mediocre results, as it alerts everyone involved to the need for change. Smith says that coming in on the heels of this dog of a program, she was able to apply best practice principles of people performance management and improve results dramatically. The lesson for today’s sales managers, she says, is that running incentives has become a complicated business, and amateur program developers are inclined to make "rookie" mistakes. The only way to avoid these mistakes may be to call in an expert.

"A certified incentive professional who understands the art and science of motivation can help you avoid unintended consequences by providing you with a proven methodology for achieving your desired results," she says. "Incentive programs are one of the most cost-effective and powerful tools you have to help achieve your business goals, but the fundamentals can’t be shortchanged or put on autopilot if you expect to be successful."