Incentive schemes and other pay-for-performance programs are particularly suitable for a company’s sales force since most sales people work largely unsupervised for a large portion of the time and such schemes help to ensure that their minds are fully focused on delivering results. Incentives can have a dramatic impact on the morale and motivation of a sales force, both in a positive and a negative sense. A well constructed and managed scheme can help drive a company’s performance to stellar heights. On the other hand, a poorly thought out approach can destroy motivation and lead to the loss of good people from the organization. The sales incentive scheme is one of the key management tools as it helps to communicate the expectations of the organization and encourage the desired
behaviors in the sales force. Many companies unfortunately approach the creation of a sales incentive scheme without spending enough time thinking about what it is designed to achieve and understanding the consequences of the elements it chooses to reward. Such programs should always be aligned with both the corporate and customer strategies to ensure that the sales force is focused on the right KPIs. It should be simple to understand and administer and be lucrative enough to make the sales team want to achieve the desired results. Finally, ongoing communication of performance is critical and the results of the scheme should be issued in a timely manner with the payout taking place in the agreed time frame.