I’ve had the wonderful opportunity to work with a number of companies on their incentive plans and sales awards programs. While a few of these companies understand how to motivate, many of them just get it wrong. Here is a short list that describes just a few of the more common mistakes that I’ve seen:
1. Focus solely on the pay plan (i.e., incentive plan, bonus, base pay). We know that employees are motivated by more than just a paycheck. Companies that do motivation right have a comprehensive plan that emphasizes more than just pay, but also teamwork, job environment, flexibility, work/life balance, opportunity for growth, new challenges, commitment to ideals, the corporate identity and a broader purpose for being there.
2. Making incentives too complex. This is typically the result of companies trying to make their incentives fair, however, if employees can’t understand their IC plan, I promise you it won’t motivate them.
3. Reward the wrong measures. Companies often reward employees for behaviors or results that don’t match the long-term strategy of the organization. In one company I worked with, all of the sales awards focused solely on revenue (because that’s what they could measure). When I talked to sales management, they needed sales people to focus on margin and conversion of competitor business. Obviously, the behavior that was being driven by the Sales Awards did not align with sales managements needs.
4. Focusing on the “cost” of the program, and not on the results. I’ve seen way too many companies focus on the cost of an incentive or sales program when they really needed to be looking at the impact it has. The cheapest solution is not always the best (not always the worst either, but the focus should be on the impact it has and the lift it can bring).