To get the most return on investment and boost sales, businesses should focus on rewarding employees who generate the best financial results for the company. By recognizing these salespeople for bringing in more business, firms can meet their sales targets and ensure growth. While the concept of incentive compensation programs sounds easy, some companies may be struggling to identify the right workers to reward. To make sure they recognize employees deserving of incentives and merit increases, companies should consider implementing sales effectiveness software to track performance accurately.
A survey by global professional services firm Towers Watson found 1 in 4 businesses give out bonuses to employees who do not achieve their performance targets, which indicates companies may not be enforcing their incentive compensation programs effectively. Companies should determine whether their existing employee compensation and rewards initiatives are actively pushing workers to meet their sales goals or whether they are wasting money on bonuses without getting a good return on investment.
“While the vast majority of employers have some type of annual incentive plan, the way some incentive plans are designed and viewed by employees raises the question of whether employers are getting a good return on their investment in these programs,” said Laura Sejen, global rewards leader at Towers Watson.
Prevent rewarding bad workers with sales effectiveness metrics
While companies may be rewarding workers who may fail to meet certain performance benchmarks, they are cutting their annual incentives budgets short, which may be another mistake. The survey revealed the average bonus funding anticipated for the current-year performance for 2013 was anticipated to be 87 percent, which is a decrease from 95 percent in 2011. Businesses should make sure they review their company compensation and see that all their workers are rewarded for their performance, according to Inc. magazine.
However, companies must be able to differentiate between their star workers and average and poor performers to get the most out of their investment.
“It appears that some organizations are simply paying for status quo, treating their annual incentive plans as an entitlement program rather than one that should reward employees for their performance and contribution to their organizations,” Sejen said. “Add to that the fact that some employers are not distinguishing enough in payments made to top and average performers.”
The survey found 18 percent of businesses did not distinguish payouts based on employee performance. Companies struggling to determine which workers are the most deserving of incentives and merit increases should consider installing software to measure sales effectiveness metrics to more easily see which workers are hitting their sales targets and which ones aren’t.
