A well designed incentive usually requires:
- A performance standard (some say quota, others say productivity expectation or goal) and
- A good tracking and reporting system (have to keep up with it if we’re going to pay on it).
And I honestly think you could get a lot of traction just by doing those two things well. Add in the reward and you’ve definitely covered a lot of the triggers that help maintain focus and motivation.
A reward system can go awry if the rewards (and risks) are so great that people get a little too “creative” in meeting or exceeding their goals, or if they are so small as to seem to undervalue the contribution they are meant to reward. The first case (inappropriately large incentives) is much of the root cause of the current backlash against incentive pay, in my view.
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.