Finance and Business

The added importance of extra recognition rewards in the 1990s

Special recognition for extra sales achievements is more important in the 1990s than ever before. There are many reasons for this downsizing is reducing opportunities to promote outstanding people-probably the most powerful and traditional way to provide recognition. In the 1990s, more than ever before, sales managers will need to recognize ambitious people by means of new challenges and enhanced incentive awards in the face of reduce advancement opportunities.

Competition is tougher, and only companies with high sales productivity, low turnover, and the most motivated sales personnel will thrive in future. Great salespeople become a competitive edge when product parity is widespread among competitors. In high-teach businesses, where short product life cycles prevail, the skills of sales reps often maintain a company’s market standing when its products lose their technological edge.

Rep skills really come into in holding customer loyalties while company labs are still working on a “next generation” product. One way to keep morale high is with special forms of recognition, a clear signal from managers of the standard of excellence they wish all employees to emulate.

Teamwork in selling is more critical than it used to be, and because most pay plans recognize individual effort, teamwork excellence is best inspired by group incentives and recognition. Incentives can be flexibly structured to recognize nonrep members of the sales team, such as support personnel and dealer employees.

In an era of more rep and manager stress, special recognition often can be the tie that binds a rep to his or her company and generates a commodity rarer than gold-corporate loyalty.

Implementing Incentives

Given that incentive programs motivate and are taking on even more importance in an era of “lean and mean,” the real issues revolve around how to design, schedule, and implement them to good effect. Here are some tips:

1. determine early on how much of the recognition and incentive you want to go for team results as opposed to individual results. If your pay plans are already individualized, you may wish your incentive plans to recognize more of a team effort. For instance, the Boston Celtics basketball team does not pay its players individual incentives based on their personal scoring or other performance statistics (as many other teams do). The Celtics have never had the highest-scoring player in the league, but they’ve won more team championships than anyone else has. They have opted to recognize team effort instead of personal effort. At a $17 million overnight express delivery company in Kearney, new jersey, the sales manager lost the ability to get sales reps to work together and help each other as a team when the company got carried away with an overemphasis on individual bonus incentives. When a manager asked a rep to help a colleague, the attitude was “forget it, I’m trying to make my bonus”. One sound alternative is to provide for individual recognition with status award programs (such as a “circle of excellence” for top sales rep, who can earn a plaque or ring) and a travel-trip incentive for team sales result, including all key team-support people.
2. Always opt for first-class awards/incentives and present them with “public” fanfare so everyone in the company is aware of them. If a quality effort is demanded to win an award, the design and selection of the prize should show the same high attention to “quality”.
3. If a travel award is chosen, award winners should out-number management or hosts on such trips;otherwise the travel award winner may question for whom the trip was really arranged. Trip participation by nonreps should have a direct or obvious justification.
4. If a merchandise incentive plan is chosen, offer a cash alternative as a trade-in. It is too difficult to choose merchandise with universal appeal and utility for all the possible winners. Reps may already have color televisions, VCRs, Microwaves, barbeques, or other usual prize. And an unusual prize may not have any value or use to the winner. Reps close to retirement may not value or use to the winner. Reps close to retirement may not value a brand new sail-board. Nondrinking reps may place no value on an award of vintage wines. Because merchandise award are often not as motivating as travel or status awards are, use them sparingly. Often overlooked awards that have universal appeal include investment instruments such as stock and bonds.
5. Set goals for incentives that challenge participants but are within their reach. Any incentive program that doesn’t fit this “fairness” test will fail. Lack of fairness is usually the single biggest complaint reps voice when discussing incentive plan design flaws. Never design a plan that favors top producers only.
6. Promote the incentive plan to ensure reps are totally familiar with the goals, rules, and ongoing results. A steady stream of reminders will bring optimum awareness and motivation. Send information on the program to reps’ home residences, not through the internal company mail. In this way, the rep’s family can be informed and involved, providing even more rep motivation.
7. Wherever possible, build “intermediate steps or awards” into any plan. This avoids an all-or-nothing scenario in which some outstanding intermediate performers never earn any recognition because final results fall off somewhat of the entire group misses the target.
8. Publicize ongoing results as the program progresses. This creates an atmosphere of steady, healthy competition. It also ensure that the program has chosen goals that can be measured and evaluated easily.
9. Always critique a program when it’s over. Use a formal method of polling reps and hosts about the program details, especially for travel award where feedback about accommodations, services, the chosen location, and activities can help prevent any future problems sometimes encountered on such trips.
10. Always make sure that the budget for the program includes a portion of money to pay the tax owed by the winners on their award. There is nothing more demotivating than winning a big prize or a trip for outstanding sales performance, only to return home and face a big tax bill from the authorities. A motivator can turn into a demotivator very quickly
11. Be careful about assuming that cash awards motivate to the equivalent extent of ather possible awards. Perceptual problems accrue to selecting cash as a motivator, because many experience managers believe it takes more cash than the identical cost of different awards to get the same results payoff. Sales reps psychologically think of cash as income almost regardless of how the cash award is dressed up as recognition.
12. Never expect the incentive plan to do the whole job of the sales manager, directing efforts of reps. Motivating reps is always a combination of compensation and solid infield coaching.

Sales Incentive

Many companies use cash and noncash incentives to motivate sales reps. They use short-term inducements for a varieties of reasons. Special cash incentives usually are paid to push a specific product or land new accounts during a compressed time period. These incentives may be used to induce reps to shift product mix emphasis, to combat competition, overcome seasonal sales slumps, boost the sales of the most profitable lines, or ensure a new product gets a short-term boost in sales attention.

New products usually take reps considerably more time to sell than do proven ones. Short-term cash inducements provide the rep with positive reasons to take the time to win over customers to the new product. Cash incentives are becoming less popular. They are often less motivating than expensive merchandise award, a trip, or are cognition symbol such as a ring, plaque, trophy, or desk set.

The rep can show off merchandise awards or share the experience of a trip prize with other, if it was wan by the entire sales team. Reps remember the energy and work that went into the noncash recognition long after the cash award is spent (often to pay bills).if merchandise awards involve choosing from among a selection of prizes, the reps can put their own personal value on the prize, since it may represent something they would simply use the cash to reduce a debt, save for their children’s education, buy a new appliance, or purchase useful, but not “once-in-a-lifetime,” items.

Trip prizes have “fantasy value” as motivators. They keep the rep thinking about and identifying with the trip’s  benefits as her or she pursues extra sales performance. Where sustained performance is desired by the sales manager, a trip prize motivates far more than do merchandise or cash award. Trip prize, combined with recognition awards that are publicly presented with fanfare to the out standing achievers during the trip, are very motivating.