Recession Therapy

By Malcolm Fleschner

You don’t have to read the business pages to know we’re in an economic slump – the news probably is written all over your sales forecasts. So what’s the first thing you should do in response? Eliminating the sales incentive program is the knee-jerk response taken by many sales organizations. But is that the right action to take? Not if you know what you’re doing, says Barbara Hendrickson, president of Design Incentives (

“It’s tempting when things get tight to put sales incentive programs on the back burner,” she says. “But that’s a mistake. An economic downturn is precisely the time to step up incentive efforts. Employees may have been laid off and survivors are feeling nervous and overburdened. They’re not motivated. This is the time to set employees’ minds to rest and reassure them that their work is appreciated. It’s time for the company to explain the impact that their efforts have on the bottom line and then celebrate when they reach new goals.”

Hendrickson also points out that well-designed incentive programs don’t cost money – they actually make money. So there’s no reason to abandon them when sales figures begin to drop.

“You can fund a sales incentive program with incremental sales,” she says. “If you structure it correctly, you won’t pay out until the goal is reached. The goal should be a nice stretch, but not impossible to achieve. You don’t want people tuning out as you’re announcing the program because they know they can never get there. If it’s a nice stretch that grows the market, you’re simply sharing a percentage of that growth with the staff who got you there.”

Ideal for these times are short-term incentives that offer lower-value awards pegged to reasonable goals, she says.

“These programs involve more of the people on your staff,” she notes. “They go after the middle 60 percent, the people who are likely to be more affected by a program because they’re the ones who are most concerned about the economy. Top producers figure they’re pretty safe and can go anywhere if things fall apart. But those people on the fence, the ones saying to themselves: Should I really work harder? What’s the use if I’m going to be gone in three months anyway? They’re the ones you have the opportunity to motivate.”