When providing incentives on job, you are making a couple of implicit assumptions: That the incentive (money, time off, balloon, etc.) is meaningful to the person receiving it and that it encourages behavior that also helps the business. So, what’s not to like, especially in sales (more revenue=more money)?
Incentives are good at driving very specific behaviors. Otherwise, they get complicated and lose their effect. However, how many jobs truly have performance defined by very few actions? For instance, when we think of incentives we think of sales. For a sale to be truly of benefit to the company (obtaining a long-term customer or one who will refer the product/service), many things need to be in place besides the persuasiveness of the sales person, such as (and this is not meant to be an exhaustive list):
1) The product must be in stock or the service available.
2) The quality of the product/service must meet the customer’s standards.
3) There must be sufficient product/service support.
4) Billing/invoicing must be handled correctly.
Any recruiter of sales people will tell you that the “best” ones will chase the position where they can make the most total pay. As good sales people tend to be very confident, this means they are looking at the highest incentives.
Management needs to consider the business outcomes of providing incentives. This article contains several different perspectives on incentives and why some companies have scrapped them while others continue paying them. Interestingly, a lot of the reasons have to do with culture: both the ones the company has and wants to avoid.
Incentives are more complicated than they sound. People want to be rewarded for their individual contribution, but there are not many situations where a single person’s efforts are the sole reason for a business success. My advice? Identify the 1 or 2 things that your company really wants to achieve. Provide an incentive to all of those who contribute to the overarching goal(s)–which should be everyone at the company.
Oh, and hire people who have a group success, rather than individual success, mentality. Also, beware of those who are very extrinsically motivated. They will always be chasing the bigger paycheck, either with you or someone else.
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