Company leaders are always looking for new ways to increase sales and bring in profits. What many often overlook, however, is the relationship between worker happiness, engagement and sales numbers. Fortunately for executives, there are some programs that will tackle all of these issues at once: incentive compensation programs.
These plans can help a company in a wide variety of ways that will lead to a positive work environment and an increase in quality performance. Keep reading to find five ways incentive compensation plans can help companies thrive.
1. Higher sales
Improving sales numbers is perhaps the most common reason executives seek out incentive compensation management plans. It’s no surprise, either – ICM plans have been proven time and again to increase sales numbers and, as a result, company profits.
By offering bonuses, merit increases and other rewards to employees who meet sales targets, employers will be able to increase motivation among a sales team, which will result in better sales numbers. Salespeople, like most employees in any industry, are motivated by financial incentives. Offering extra compensation for ramped up performance will boost sales, quickly and effectively.
2. Teamwork
Many people view sales as a zero-sum game in which employees compete against one another for top clients and larger paychecks. If this is the case at a company, not only will workers feel pitted against one another, productivity will drop as salespeople become discouraged.
Incentive compensation plans can help remedy this kind of situation. In addition to individuals sales competitions, executives or supervisors can set up team-based sales events in which groups of salespeople work together to reach a common goal. This will create an environment in which salespeople feel comfortable sharing tips and best practices for selling a product, and can form positive work relationships with their colleagues.
3. Increased engagement
A recent Gallup poll found that 70 percent of Americans are disengaged from their work. This is bad news for companies everywhere, as disengaged workers can cost a company money and drag down sales numbers. One way to bring employees back to life is to use incentive compensation plans.
Individuals will be motivated not only by the prospect of financial gains, but by other rewards as well. For example, a VP of sales can set up a sales competition, and instead of rewarding top salespeople with money, they can offer such benefits as a day off from work or the flexibility to work from home. The same Gallup poll found that some of the happiest employees were those who had flexibility in their work schedules, so offering these kinds of ICM benefits will prove to be effective and help increase engagement.
4. Reduced turnover
When an employee is satisfied with their compensation plan – whether it includes base pay plus commission, bonus rates or merit increases – they are more likely to stay loyal to a company. As any HR professional knows, high turnover rates spell trouble for companies, as the hiring process can be as frustrating as it is expensive.
Using an incentive compensation plan wisely will reward workers for high performance and decrease the likelihood that they will seek out employment from competitors.
5. Improved morale
A happy worker is an efficient one, as well as a positive influence on the rest of the office. However, it’s difficult to be happy when an employee feels undervalued or feels as if their hard work goes unrecognized. ICM plans reward individuals with money, gift cards or other motivating factors, but they also show employees that they are valued.
Praising an employee for their performance is a smart way to increase individual happiness and job satisfaction. When and entire sales team feels the same way, morale will increase around the office and a company will thrive.
