Top Strategies for Effective Incentive Compensation Management

More companies than ever before are beginning to realize how effective the right incentive compensation management strategies can be. For example, as much as 50% of an employee's preferred award experience has more to do with presentation and professional development than with its monetary value. That means that the right incentive designs can increase performance without breaking the bank.

However, creating an effective incentive compensation management system can be harder than it looks.

Depending on how you do it, you might even find that it backfires and causes problems. On the other hand, the right incentive compensation management strategies will help you achieve efficient employee performance growth. So what should you focus on to make the most of incentive compensation management?

Read on to learn all about the most powerful tactics for using incentives to take your business success to the next level!

Make a Simple Sales Incentive Program

One of the most common ways that people mess up incentive programs is by making them too complicated. As in many aspects of business, there is a subtle power in simplicity that you should aim at.

That goes double when you first create your sales incentive program. You might put a lot of hours into designing the nuances of your system. That can make it feel comprehensible and legible in your mind.

However, your employees will not want to spend as much time pouring over the details of your incentive system. The more complicated your system is, the higher the chance that employees will become frustrated trying to understand it.

You will achieve better results by creating a few clear incentives. Then, make sure sure that your employees understand with precision how they can qualify for rewards.

You might have seen some complicated incentive programs that seem effective. However, effective complicated systems tend to grow over time. 

Wait until your employees are used to your simple system. It may then be reasonable for you to add one or a few pieces to your incentive system at a time.

However, even then, you should be wary of making your system too complicated for employees to understand without devoting hours of study to it.

Tie Incentives to Real Employee Performance

If you are going to focus on a few core incentives, you will want to get as much out of them as possible. That means tying them to the performance indicators that lead to real company flourishing.

If you are not careful, it is easy to incentivize the wrong things and fail to get real success out of your incentive program. For example, you might incentivize your sales team to make as many calls as possible. However, that might lead people to make calls that they do not expect to lead to actual sales.

Healthy competition is a great way to get people fired up about trying to hit new numbers. However, it can also lead people astray if they start pouring hours of work into tasks that they know will not help your business grow.

On the other hand, you can use temporary incentives to help employees learn to get used to certain tasks. Some salespeople are reluctant to make cold calls or follow-up calls. You can try incentivizing these tasks for a short amount of time so that everyone gets used to doing them.

Give Recognition to Sales Leaders

If you want people to take your incentive rewards seriously, you should make them worth something. However, it is also important to remember how much people value non-monetary rewards.

If you give someone a significant financial reward, you can get even more bang for your buck by doing it in a public way. Recognizing employee leaders can create a memory that will last long after they have spent the money they receive.

Compare Performance Goals to the Big Picture

It is important to make sure that your incentives align employee interests with the goals of the whole company. In some cases, an incentive can drive employees to succeed at their own work, but at the cost of interfering with other aspects of company operations.

For example, a sales team might be so focused on completing sales that they fail to provide the necessary information to the shipping department. Make sure that your incentive program does not lead to negative side effects, or it will begin to lose its appeal.

Use Incentives With Different Timelines

Try including incentives for both short-term and long-term performance. People who do not win the short-term rewards will begin to pay more attention to improving their performance in the long run.

Avoid Ambiguity in Annual Incentive Plans

Make sure that you have a specific way to measure who receives each incentive reward you established. An easy way to sour people's enthusiasm for incentives is to create ambiguity about who should receive rewards.

Use Sales Incentive Software

Managing a new incentive system can be complicated. However, you can find quality incentive software to help you. As you learn more about your software tools, you may find that they inspire you with ways to improve your incentive program as well.

Use the Best Incentive Compensation Management Tactics

At first, creating an incentive compensation management system can seem complicated. However, with the right tactics and strategies, you can make the most of this powerful business growth plan. At the end of the day, one of the most reliable things about people is that they respond to positive incentives.

To learn more about how you can find the best tools for your incentive compensation management, reach out and get in touch with us here at any time!