Show Successful incentive compensation plans push the right buttons to achieve optimal results for sales organizations. In their most basic form, you can consider incentive compensation plans to be a series of if/then statements. If reps achieve targets, then incentives are paid out. If reps fail to hit strategic sales goals, then they miss out on lucrative bonuses. These rewards and missed opportunities are used as a way to “program” the sales team by encouraging the right behavior and discouraging wasted efforts. When building an incentive program there are numerous variables to take into consideration, including the company strategy, cost of sale, sales team structure, sales goals, role boundaries, individual rep characteristics, and much more. With so many different components and characteristics to account for, plan designers can feel overwhelmed, but don’t be discouraged! Here are some essential components that can help you align business goals and incentive compensation plans that get your sales team back on track. Behavior Modifying Tips:
Developing incentive compensation plans can be a daunting task. There are many components that need to be accounted for. If you’re currently having trouble with developing motivational incentive comp plans download our latest compensation plan design guide:
Reducing base salary for sales reps who have consistently delivered with their prospecting efforts is a great way to build motivation directly into their comp plan structure. However, if you have a new hire or an account manager, who’s main job focus is to maintain accounts and not seek out opportunities, a lower base salary would provide greater incentive to potentially seek employment elsewhere. As an incentive comp plan designer, you need to be attuned to the nuances of the roles on your sales team. Performance should also be tied to overall business performance. After all, if an organization is struggling, it’s difficult to justify paying out huge commissions. Being cognizant of your organization’s bigger picture will allow you to find the balance between corporate and individual goals.
There is no set formula for creating effective incentive compensation plans. Sales organizations should be in tune with the talents and strengths of their sales teams. This will lead to better overall incentive comp plans with a focus on sustained motivation. These tips are only a starting point asyour organization may face a variety of different challenges when trying to cultivate a successful sales culture. If you’re currently trying to make changes to your incentive comp plans or are considering sales performance management software solutions we would love to get in touch. With over a decade of experience helping sales organizations simplify their path to achieving and maintaining success, Intangent is uniquely positioned to provide guidance with anything and everything related to Sales Performance Management. Schedule your free consultation here! What is the most popular incentive given by employers?1. Bonus. A bonus is paid to an employee as an incentive to perform well throughout the year. Most times, employers award a bonus for a specific achievement that meets the company's expectations.
Which form of compensation bases pay on employee performance?Performance-based compensation (PBC) is a system for rewarding employees financially, outside of their regular salaries.
What is the most common type of pay for performance used by firms?The most common type of pay for performance used by firms is merit pay increases. This compensation framework usually gives employees annual salary increases in degrees that are based on their performance reviews.
What is an example of incentive pay quizlet?Which of the following would be considered an example of incentive pay? A lawn care service owner pays his two salespeople a salary of $25,000 per year. On February 1, he informs them that for every 15 new clients one of them signs, that salesperson will earn a $200 bonus.
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