NEW INCENTIVES: A STRATEGY TRAGEDY?

By Malcolm Fleschner

Americans tend to have high expectations for themselves, their businesses, their families – you name it. So it should come as no surprise that we also ask a great deal of our sales incentive programs. But as management consultant Bruce Merrifield points out a new incentive program rarely provides an impetus for the significant, sustainable and successful behavior change many sales organizations hope to achieve (www.merrifield.com).

Instead of making unreasonable demands on an incentive program, Merrifield suggests you first examine the underlying support issues that must be changed before a new incentive plan has a chance to work.

1. Strategy

Too many firms try to serve too many masters, Merrifield argues. As a result they lack a crisp value proposition that focuses on a specific type of customer. By attempting to make up for a fuzzy competitive strategy with a revamped sales incentive plan, companies simply ignore the underlying problem – and salespeople typically are glad to play along.

“Any new incentive plan will get people excited for about two weeks, which is also the length of time those health resolutions last after the New Year,” he says. “After a few weeks most people go back to doing their habitual job regardless of what they might continue to tell you about the new plan.”

2. Systems or interdepartmental processes

When asking salespeople to adopt new behaviors, bear in mind that there will be ripple effects throughout the organization, Merrifield cautions. Salespeople asked to change their behavior might need new information resources and support from departments they aren’t used to dealing with. Before putting the new incentive plan in place, Merrifield suggests plotting out precisely how different departments will be expected to work together. Then plug any gaps and fix any anticipated breakdowns in the information flow. All of this should be performed with the ultimate goal of improving value for the customer, he adds.

3. Talent

If you’re asking people to change behaviors with a new incentive plan, make sure your people have the right mindset and attitude to execute the new strategy. “Most salespeople will tell you it sounds great, and then keep on doing what they are doing,” Merrifield says. “Some will even passively resist the new incentive plan and direction because they honestly don’t see a compelling need to change or don’t feel they can do it without apparently failing in some way. New action requires new learning by doing, which means failing forward to new competence; most people aren’t really very good at doing that.”

4. Tools and training

Just because your people have the raw talent necessary to do the job doesn’t mean that they have the tools or training they’ll need. “If we do a first-time home-improvement project, there are usually one or more key tools and tips we need to do the job easily and effectively,” he says. “Will a new incentive plan fizzle because we have not provided the total tricked-out set of tools, tips and aids that will help the new job get done in a more effective fashion?”

5. Support

A new approach requires new thinking, not only from the sales team but also from management. Merrifield notes that managers who are satisfied with the status quo might not be the ideal shepherds to lead the herd in a new direction.

“If you play golf or tennis and think it’s time for your children to learn how to play, who is the best person to teach them?” he asks. “Usually not the parent! As you consider concerns about launching a new incentive program, also take into account who will be responsible for managing it and keeping things in alignment. If one of these areas is neglected or ignored, the incentive plan’s overall effectiveness will be compromised. Also consider the fact that you likely will be recruiting new people for the re-conceptualized job. Will old guard managers be able to coach old and new employees to master new behaviors or will they practice let-them-figure-it-out neglect?”