The right incentive compensation plan can benefit business in a variety of ways – from increased profits to newfound motivation among staff. Incentive compensation management can transform an organization. Incentive compensation plans are often used to quickly correct company behavior, but many businesses overlook the long-term power of such programs. Here are a few of the top long-term benefits of using an incentive compensation plan:
Increased sales
Perhaps the most common reason companies use ICM plans is to increase sales rates. In both the short and long term, incentive compensation plans have been proven to work to motivate staff to sell more effectively and efficiently. After the initial implementation stage, companies may soon see an increase in sales rates among staff. When using the right ICM plan, these effects are set up to last, as executives can make changes to their plan to adjust for staff needs.
Incentive compensation software is a tool that makes the compensation planning process especially easy for companies to handle. Software allows executives to tweak plans, add in monthly or yearly sales competitions, change reward systems and track employee performance, which all contribute to an increase in sales in the long haul.
Improved office morale
If a company wants to feel like its employees are happy to be at work, incentive compensation plans are a great option. Rather than making a sale, completing a transaction or carrying out administrative tasks each day without motivation to strive to do more, employees at a company with a great ICM plan will feel differently. These employees will have a major source of motivation to carry out their jobs well, whether it’s a financial bonus waiting for them if they hit a certain number of sales, or an extra day off if they receive a certain number of positive customer service feedback surveys.
These employees will be more motivated to show up to work every day and may be happier in their current roles. Happy employees inspire others to feel the same, creating an overall positive work environment for a company. Companies with happier employees tend to have higher levels of engagement and productivity, making improved office morale important to company success.
A sense of camaraderie
Depending on how an employer implements an ICM plan, they can focus on individual rewards, team motivation or both. Companies can focus on teambuilding through ICM by developing group-based rewards systems. For example, a supervisor can launch a sales incentive program and reward the top sales department rather than individual sales person. This will bring departments together to brainstorm new and interesting sales methods, will encourage staff to get to know one another and will create an environment in which employees feel comfortable with one another. An increased sense of teamwork will contribute to higher sales and a positive work culture in which employees feel supported and engaged, bringing coworkers together. The long-term benefits of a team-oriented office are numerous – companies with a strong sense of teamwork often experience lower turnover rates, higher sales and increased business success.
Reduced employee turnover
The cost of replacing an employee is extremely high. According to Inc., magazine, the total cost of replacing an employee, from time lost to lowered productivity, can total up to 150 percent of the lost employee’s salary. One of the most most effective ways to keep around top performers is to compensate them appropriately. Top salespeople, for example, will likely be able to find employment at many organizations. Rewarding them with competitive incentive compensation plans will show these employees they are valued at a company and will inspire them to increase their performance and stay in their current position.
