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Wholly Motivated
March 02, 2007
Motivating your sales force is a multi-pronged effort. Here's the latest in how to pay, reward and engage your reps.
By Julia Chang
Napoleon Bonaparte once said, "There are two levers for moving men: interest and fear." The diminutive French emperor's words remind us just how long the carrot-or-stick approach has been around. But managers who try to simplify their staffers' motivation down to an either-or statement aren't seeing the whole picture. Inspiring and fueling your sales and marketing team members is about more than a fat paycheck or an annual trip to the Bahamas. It's about recognition, rewards, feeling connected to your work—and yes, of course—getting paid what you're worth.
Experts say savvy companies are embracing new trends in compensation, incentives and employee engagement to ensure their staffers' motivation levels stay high. Check them out to see what may work for your company—and to avoid Napoleon's simplistic approach, which could have your employees placing you in exile.
Compensation
Compensation is the most commonly dangled carrot, but companies are realizing that the typical compensation model—paying for end results, such as revenue or number of products sold—isn't always the most effective. Here are the latest ways in which companies are experimenting with pay plans:
Big Picture Metrics: It's not new that companies have been putting more pay at risk to achieve more aggressive performance goals. What is new, however, are the types of metrics companies have been tying to pay as they focus on the big picture. Compensation tied to larger corporate goals, such as profitability or share price, versus just the profitability of the reps' sales, is becoming more common, says Joe DiMisa, Atlanta-based senior vice president and sales and marketing practice leader for human capital consulting firm Sibson Consulting. Other metrics such as the cost of sale are also being considered more frequently in compensation design. "More companies are asking, 'Am I paying properly based on the productivity that I'm getting, or compared to the industry?'" he says.
The focus on customer service specifically as a pay metric is becoming more popular, "particularly in jobs that have a blended selling and service responsibility," says David Cichelli, senior vice president of The Alexander Group, a sales performance consulting firm headquartered in Scottsdale, Ariz. The challenge, however, is pinpointing the right measure. Service metrics can be hard to define, though customer loyalty and referral rates are emerging as good starting points.
Greater Flexibility: Pay plans are no longer as set in stone as they once were. Companies are more willing to reset metrics based on their business needs. For instance, "they can be updated during the course of the year based on new product launches," DiMisa says. More companies are also willing to let their frontline managers take the lead when it comes to determining the exact metrics. Corporate might mandate which factors are weighed, but will give the manager a percentage range to work with. For example, if one of the compensation measures is the sale of strategic products, corporate might say that the measure must comprise at least 10 percent, but no more than 20 percent of the salesperson's pay, leaving the exact figure up to the manager who knows the rep best. "Managers are being asked to commit more, so companies want to give them more flexibility," DiMisa says. "At the end of the day, managers are saying, 'Let me run my sales organization.' The allowance of discretion is very motivating for the manager."
Group-Influenced Incentives: For sales team members that rely heavily on each other, team incentives are emerging as a way to reward collaboration, Cichelli says. But he warns that group incentives should only be for teams who must work together to achieve success—not merely because they work in the same office or work unit, which are really "proximity" incentives. Cichelli also notes the trend of "forced ranking," where an incentive pool is divided up based on individual salespeople's rankings. The risk for managers, however, is dealing carefully with the competition this creates, which could light a fire or create hostility.
Getting Detail-Oriented: Cichelli says some firms are using "scorecards," essentially an input or output measurement system in which pay design includes the smaller steps reps take to close a deal. A scorecard is meant to encourage certain behaviors. The danger, he says, is "it can require too many measures, and the sales force may think it's remedial because they are being instructed on the micro steps of their work." On the other hand, if done right, basing pay on more detailed activity may illuminate how much time reps spend on selling vs. nonselling activities. "The deeper analytics help set better motivational strategies and compensation plans," DiMisa says
Incentives and Recognition
Due to the diversity of today's workforce, plaques, fancy watches and annual President's Club trips are being supplemented with newer and more creative incentive and recognition strategies. Here are the trends influencing why companies are bucking the tried-and-true methods and products to reward and recognize workers:
Globalization: The global economy is influencing how corporations are rewarding their international sales forces. They are no longer taking a U.S. paradigm and trying to make it fit on other continents. They are choosing to localize their incentive programs, says Mike Arkes, CEO of Chicago-based incentive design company Hinda Incentives. For one, this strategy helps cut costs. "You don't want someone shipping a product from Chicago to Naples, Italy. You want someone in Italy shipping it," he says. In addition, a local incentive manager will know better what products and program designs motivate in that country. "What we might think of as wonderful might be totally inappropriate somewhere else," Arkes says. "And what's a good brand here might not be in a market someplace else."
Multigenerational Workforces:
Younger generations aren't as impressed with the workforce-centric incentives that their older counterparts were awarded. In fact, they probably crave the opposite. "What they really want is time off so they can spend it with their families," says Dianne Durkin, president of The Loyalty Factor, a training and consulting firm based in Portsmouth, N.H. As a result, rewards like weekend getaways for the family—versus, say, a company picnic—are becoming more popular. In addition, "this is a saving generation," Durkin adds, which means incentives that build up a nest egg, such as additional contributions to a 401K program, are greatly appreciated.
Continuing Education: Many employees would rather use their company's incentive budget toward rewards that help them advance personally and professionally. The opportunity to attend educational seminars, professional conferences, personal skills workshops and after-work classes—for personal or professional pursuits alike—prove employers are invested in their employees' growth and development.
Lifestyle Differences: Personal preferences in travel and experiential rewards are beginning to boom because of lifestyle-focused incentives. Now, "it's not just about getting golf clubs, it's getting to take lessons, too," says Paula Godar, director of performance strategy for Maritz Incentives, a St. Louis-based incentive program design firm. "Or it could be swimming with dolphins or attending car-racing school." Godar notes that experiential rewards cross generational boundaries, too. "Baby boomers still want to try out [new experiences] while they still can."
Corporate Culture Influences: Recognition programs these days are not simply a way to say thanks; they are also emerging as a way to acknowledge when staffers are living out corporate cultural values, internal or external, Godar says. "There's an awareness in Gen Y that they want to find meaning in their work. [Recognition programs] are being used as a way for the company to drive mission and values." Smaller-scale incentives are being offered through points programs to help reinforce corporate culture. "[Companies] might reward for things like good collaboration, having a customer focus, or going above and beyond," says Theresa Thomas, a relationship manager for Hinda. "Or it can be for specific behaviors, like putting products in your proposals, multiple product sales, or a great close in the call center."
Employee Engagement
Engagement is perhaps the hardest element of motivation to grasp, since it's often the most intangible. But as the war for talent and retention heats up, it's important for companies to consider
Training and Development: How motivated salespeople are (and thus, how they interact with customers) is due in part to how they have been treated from the time they were hired, says Howard Stevens, CEO of sales performance consulting firm HR Chally Group, based in Dayton, Ohio. For instance, "Did they get the right training from the start, or was it three or four months before the next training program was offered?" he says. Ongoing coaching, mentoring and training, even for A players, is also key. "In the past companies spent more time with B's and C's, but now they realize A's are craving attention," Sibson's DiMisa says.
The Right Job and Pay: When staffers believe their strengths are being used and they are getting compensated accordingly, they will feel ownership over their jobs. This is why many companies are using competency models to ensure staffers are matched up with the right roles, and are willing to customize sales roles beyond just hunters and farmers. "Maybe this rep is good in acquisition selling, this one is good at penetration selling, or this one is good at retention selling," DiMisa says. "More specialization creates better performance, which in turn creates better pay, which is motivational."
HR Chally's research on more than 200,000 salespeople shows the most common reason why salespeople fail: They were in the wrong position. "The talent for new business development is different than for account maintenance," Stevens says. "The bonus plan for a pitcher [should have] nothing to do with the hitting."
Creating Ownership: Power to the people should be the mantra for employee engagement. Employees on the lower rungs of the ladder especially are often overlooked as a resource for solving bottom-line issues. The Loyalty Factor's Durkin says she's worked with many companies in which executives were amazed at the solutions employees came up with when asked to solve a corporate dilemma. She's seen workers come up with ways to remedy inventory problems, create corporate policy and procedures manuals, and come up with cost-saving initiatives. "Senior executives will always say, 'Oh, they can't do it,' or 'They don't have time to do it,'" Durkin says. "At the end of the process, they see employees get excited and committed to making things happen."
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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