Most sales-incentive plans are remarkably simple: sell more and you get something, whether a prize, cash or a trip to a desirable travel destination. But more and more, today’s forward-thinking organizations are stepping outside the restrictive sales-incentive box to expand incentive programs to include other key team members and even nominal outsiders.
At the September 20-21, 2001 Incentive Compensation Conference, Synygy, a leading incentive software company, surveyed executives and variable compensation professionals about their use of incentive programs to alter behavior. While just 28 percent of respondents said they use incentives exclusively as a sales-motivation tool, 60 percent acknowledged using incentives for non-sales staff members.
So if not to increase sales, what types of behaviors are companies trying to promote among non-sales stakeholders?
“Incentives can be used to drive excellence across all points of the supply chain,” explained Mark A. Stiffler, president and CEO of Synygy. “Vendors can be rewarded for timely delivery, for quality or for inventory management. Partners might get incentives for Web click-throughs, lead referrals or product promotions. Employees are now seeing more widespread use of pay-for-performance programs that reward non-sales achievements. Customers are even given incentives, through customer loyalty programs, referral rewards and other similar programs.”
And what do the companies sponsoring these incentive programs hope to accomplish? 100 percent of survey respondents agreed that incentive compensation can link business strategy to rewards, while nearly that many felt that incentives can encourage employee retention (89 percent agreed), focus individuals to work together (89 percent agreed), allow employees to share in the risks and rewards of an company’s strategy (97 percent agreed), increase sales (97 percent agreed) and drive cultural change within organizations (91 percent agreed).
But respondents readily acknowledged that expanding incentive plans to include others outside the sales force will not solve all a company’s troubles. They lacked faith that incentive programs could address employee-relations issues (45 percent agree) or be used to replace base salary (39 percent agree).
The learning lessons from the Synygy survey seem clear. While incentive programs have the potential to work to a company’s benefit beyond the limited scope of generating increased sales, they should be used judiciously to drive positive behaviors that inspire specific results. Just don’t ask an incentive program to be something it’s not, or you risk alienating the very individuals you’re supposed to be motivating.