Skip to main content
Iconixx Insights BlogIncentive Compensation ManagementSales Performance Management

Making it work: Avoid incentive compensation mistakes

By August 12, 2013June 11th, 2024No Comments

Incentive compensation plans are designed to increase performance and drive performance among employees. These programs have been proven to work time and again, but without effective leadership and thoughtful implementation, executives may not get the results they had hoped for. (

There are several pitfalls that plague companies when trying to initiate a new plan, however, there are ways to counter these negatives. Keep reading to find ways to avoid some of the most common mistakes executives make while mapping out incentive compensation programs.

Sparking conflict
Incentive compensation management plans should aim to increase group performance as well as individual success. Many employers tend to overlook the value of teamwork, and the results can be troubling. Salespeople largely rely on their own personal sales achievements to earn their income, which is why many companies set up individual sales competitions to push for improvements, as well as to find top achievers in the making. However, a company that solely uses individual competitions may notice a decrease in morale, as well as a decline in office relationships.

Instead, an employer can negate these effects by setting up group sales initiatives. This doesn’t mean that a company has to get rid of individual incentive competitions. Rather, in addition to short- and long-term individual programs, executives can also include regular group activities. When staff work together, they can build camaraderie and will push themselves to increase sales to benefit themselves as well as their colleagues.

Inefficient employee tracking
In order to assess the effectiveness of an ICM plan, it is essential to track employee performance. Many companies, however, do not keep up with this practice regularly enough for it to be effective. Using spreadsheets to track employees’ sales numbers, attendance and other factors is an unreliable practice that is prone to error.

An ICM plan should be evaluated on a regular basis. Incentive compensation software can help streamline and improve employee performance management across the board. VPs of sales and supervisors can use ICM software to accurately monitor performance as often as they like. With ICM software, data is updated regularly – even daily – to ensure that information is consistently up to date. Executives will be able to see individual employee performance, sales charts, department performance, industry trends and more.

Not considering employees
VPs of sales often think that setting lofty goals under tight deadlines will drive performance, but they may be mistaken. Sales numbers may increase in the short term, but soon staff members can burn out and become resentful of the tasks they have been assigned. Regularly working late in order to earn an incentive isn’t healthy, and will likely result in low engagement and morale.

Instead, it’s important to remember that employees are human and have lives outside of work. Employers should strive to help staff balance life and work. One way to do this is to set aside breaks between sales competitions so team members can feel at ease while at work, rather than constantly battling to earn an incentive.

Another way to encourage balance is to incentivize workers with rewards that are based on relaxation and interests outside of work. A reward such as a day off from work can refresh top salespeople, while gift cards to restaurants or popular stores will ensure that high performers set aside time for themselves and their families. Other possibilities include the option to work from home as a reward, which may increase engagement and overall happiness.

Above all, the point is that staff members are human – sometimes they need to have some fun, go out to dinner out with a significant other or even take a day off from work.

Leave a Reply

Close Menu
Ballast Point Ventures

Ballast Point Ventures is a later-stage venture capital fund established to provide expansion capital for rapidly growing, privately owned companies in diverse industries, with a particular emphasis on companies located in Florida, the Southeast, and Texas. The BPV partners have more than 70 years of combined experience investing in and building high-growth companies in a number of industries, including healthcare, business services, communications, technology, financial services, and consumer goods. BPV has $200 million under management and seeks to make equity investments ranging from $3 million to $10 million.

Harbert Management Corporation

Harbert Management Corporation seeks to generate superior returns for their investors by identifying and investing in the most promising early growth stage companies in the Southeastern U.S. HMC seeks to capitalize on what it believes are compelling regional dynamics, such as a strong and fast-growing economy, significant research and development activities, and an established entrepreneurial community. The HMC team combines substantial investment, advisory, and operating experience with capital and networking contacts to support great entrepreneurial teams in successfully executing their growth plans. With offices in Birmingham, Alabama; Richmond, Virginia; and Gainesville, Florida, it’s well positioned to partner with entrepreneurs throughout the Southeast.

KBH Ventures

KBH Ventures was an early investor in Iconixx Software. KBH's investment philosophy plays a significant role in the firm's successful track record. KBH believes in running businesses to be cashflow positive and profitable every month. Startups and companies in a startup mode, such as one that has been purchased in distress, are expected to generate revenue within the first six months and reach profitability within the first 12 to 18 months. KBH also only invests in or acquires companies that are in the startup phase or have less than $20 million in revenues. KBH targets technology companies that offer business-to-business services.

S3 Ventures

S3 Ventures is an early expansion and growth stage venture firm with $200 million under management. It’s focused on information technology solutions that solve large business problems. S3 also invests in medical devices that improve the human condition. S3 invests in category-defining opportunities. It partners with the team and help focus methodically on what it takes to build a successful company. S3 today helps talented entrepreneurs take their technology and market knowledge and form valuable businesses in a repeatable fashion. Investment sizes start at several million or more for Series A, B, and C financing.