10 Incentive Mistakes to Avoid at All Costs

By Sally Stevens
The HR Chally Group

Incentive programs can motivate your staff to new heights, but make certain you sidestep counterproductive mistakes.

The most common mistakes in installing incentive programs often stem from three shortcomings on the part of sales managers.

First, a manager's natural tendency is to assume that salespeople are motivated by the same things he is. This leads him to get together with other managers to plot out an incentive program with prizes that please them, not realizing that salespeople most often have different drives.

A second, more dangerous source of error is the attitude that salespeople are not as important as management. Since becoming good at sales is often an intuitive process, many excellent salespeople do not have, or need, a strong educational background, while managers tend to pride themselves on their education. This can lead managers to emphasize their own sense of value in incentive plans, while attempting to discount to some extent the hard knocks methods and styles that salespeople often rely on.

The third most common source of incentive mistakes is mimicking the competition. Sales managers frequently design an incentive contest that matches a competitor's promotion prize for prize. But if you want your sales force to be original and to outstrip the competition, then it stands to reason that your incentive program needs to be original and outstrip the competition's as well.

Keeping these points in mind, we have come up with the following list of mistakes often made in preparing an incentive program.

MISTAKE 1:  TRYING TO KEEP EVERYBODY HAPPY

Poor performers needn't be, and probably shouldn't be, too content, unless they are trainees from whom you wouldn't expect great results. Prior to the 1960's, little attention was paid to how people felt about their jobs or workplaces. Then we tried various job-enrichment, happy-worker programs to improve working conditions in order to improve output. Most programs failed. Now, instead of saying, "Happy salespeople make more productive salespeople," we substitute, "Only productive salespeople should be happy." Incentive professionals advise that everyone should win something in an incentive contest, and that's fine. Just make sure not to go overboard in rewarding poor performers.

The key is making job satisfaction a result of productivity. In a well-run incentive program, salesperson satisfaction improves as a result of increased efforts and sales. Seldom does job satisfaction lead to increased performance. This myth is outlined in Figure 1.

MISTAKE 2:  FAILING TO SEPARATE NOVICES FROM VETERANS

Don't use the same contest guidelines for both trainees and salespeople. During training, a salesperson is still learning how to produce. The points awarded him in an incentive contest, then, should be tied to the quality or quantity of his efforts. Award him points for the number of calls made, leads followed, or improvements made in product knowledge (see Figure 2). Trainees generally don't produce impressive results. Designing an incentive contest going on the assumption that they can will have a negative effect on trainees' attitudes toward sales as a career.

MISTAKE 3:  NEGATIVE REWARD ON HIGH PRODUCTIVITY

Many times, as salespeople produce more, the increased performance is believed to be a result of easier sales, rather than more effective selling skills. Some psychological theorists believe that managers have a hard time believing that anybody who reports to them is worth more than they are. Therefore, they feel they have to cap a salesperson's salary and incentives so they won't become inordinately high. Many top salespeople perceive this practice as unethical, so it is not always wise to ensure that a regional manager wins as much in an incentive program as his best salesperson.

A sales manager may also feel justified in doing this because he feels that selling is getting easier because management is doing a better job of advertising and sales support. This would probably be accepted by most sales forces if the incentive program offerings increase in value when selling gets more difficult, such as in tough economic times.

MISTAKE 4:  TARGETING PRIZES TOWARD THE WANTS OF THE ENTIRE SALES FORCE INSTEAD OF THE HIGH PERFORMERS

Generally, one finds high performers seeking independence vs. security and desiring rewards with some long-term underlying value to them. They usually prefer to satisfy their short-term needs themselves. They want to build long-term advantages, such as hobnobbing with top executives on an incentive trip, that will give them prestige and lead to advancement. Less effective individuals typically look for short-term rewards and don't like to worry about their long-term performance. Slanting incentive awards toward top performers may help alter such attitudes among the lower rungs of the sales force. If this doesn't work, try offering sales education seminars as an alternative incentive to poor performers.

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