Regarding whether or not incentives actually help at all, the best piece I’ve read on the subject is Rewards and Intrinsic Motivation by Cameron and Pierce. It’s dense and academic in tone, but I’ve read the whole thing and found that the key points relevant to sales compensation design from the book are the characteristics of effective rewards. According to Cameron’s and Pierce’s research, incentives and rewards are most effective when…
- Used for the benefit of the employee (not just to create benefits for the employer)
- Focused on challenging activities (not on activities that employee sales people already like to do)
- Tied to specific reasonable, objective, and attainable standards of performance
- Accompanied by celebration of significant successes by the organization.
In addition they note that, “Reward systems that are discretionary, subjective, or based on pleasing the people in charge are often seen as unfair and coercive. What is ‘good’ today may not be good enough to earn a reward tomorrow.”
There is substantial written work questioning the effectiveness of incentives in creating sustainable healthy motivation. This book takes this question on, focusing mostly on the education and compensation application of the principles.
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.