What's the Best Method for Assessing Sales Incentives?
How do we figure out the return on investment of our employee rewards and recognition programs, particularly those for salespeople? <i>—Not Getting It, learning and development manager, Pasay City, Philippines</i>
Dear Not Getting It:
Motivating a sales force can be a tricky task, and measuring how rewards and recognition influence that motivation can be even more elusive. There is no one set measurement that will alert you to the success or failure of recognition programs; however, by looking at several metrics you can obtain a comprehensive view into the effects these investments can bring.
It's important to first understand what you are measuring. Employee rewards and recognition programs are not just corporate niceties, but tools to drive sustainable motivation.
Monetary and time-off awards can be effective in providing short-term bursts of motivation and ambition in employees. However, the effects are rarely sustainable. Be mindful that compensation based-rewards have a way of encouraging competition as well as stress among employees, especially salespeople. This can be dangerous for the sales force as competiveness affects morale and can cause salespeople to focus on their rewards instead of the client.
Recognition investments should work to drive intrinsic motivation. Sustainable motivation is derived from the satisfaction of three psychological needs shared by all—competence, relatedness and autonomy. By creating reward and recognition initiatives that address these needs, managers can achieve a long-term productive and fulfilled workforce.
To fully understand the motivational effect of your programs, you should measure the short-term and long-term effects of these talent investments. Think about the activity input you intend to drive from the program; then evaluate the activity output. For example, are employees closing more calls, winning larger deals or producing more actionable leads? This is one way of measuring the short-term effect of a program: Ask, "Did it help spur the immediate change we sought?"
Although short-term wins are important, they don't tell the whole story. Rewards and recognition programs should help shape the morale of the sales force, instilling a culture that is marked by highly motivated and engaged employees. One way to measure the long-term return on investment is by looking at employee turnover rates, absenteeism and productivity. An effective recognition program will not only produce immediate changes in activity, but will also instill an environment in which employees sense that their motivational needs are met, thus often leading to greater morale and productivity.
Lastly, although the formal measurement of ROI is important, don't underestimate the importance of informal ROI. Take time to talk with your salespeople about their motivational needs and the effect of rewards programs. Instituting programs based on the feedback you receive reinforces your commitment to helping the sales force satisfy their intrinsic needs.
SOURCE: Chris Blauth, AchieveGlobal, Tampa, Florida
LEARN MORE: Read The Golden Egg of Incentive Pay Policies Is an Elusive Bird.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.