The shelf life of compensation plans

One of my friends contacted me recently, complaining that the Sales Incentive Plan that his company introduced a little over 4 years ago, does not seem to “work” any longer.The Sales people are not motivated, results are down and employees are complaining about how their incentive is structured. He even says that it is whispered that the plan is not helping push the exciting new products and services that were launched recently and employees have found ways to maximise their pay results, often against the company’s best interest.

The Sales Incentive Plan used to be a great success at the organisation, having generated a lot of interest on the part of the salesforce, and helped drive big achievements in the products the company wanted to focus on. So he was wondering what was going on.

Well, this is a reminder about Compensation & Benefits programmes, and some of their limits.

All C&B and HR plans have a shelf life, and need to be re-examined on a regular basis.

Your incentives, benefits, allowances… will lose on their motivational impact because as human beings, we all get used to even the best plans, and will lose interest if something new is not introduced to maintain our attention. Companies change, strategic focus changes, and if you don’t review your plans on a regular basis, you also run the risk of losing on their organisational impact, because they may not be fit-for-purpose any longer.

This is most probably what happened to the Sales Incentive Plan at my friend’s company. The decreased results and gaming taking place to maximise personal results are a sure sign that it is time for them to fully review their incentive scheme. It may have been a great plan, but today it does not help deliver the results that they are looking for. So it needs to be totally re-assessed, and redesigned to fulfill their needs of today – not the needs of yesterday.

There is no point in keeping a plan alive “because of the past”. Analyse what made it successful at that point in time, learn from it, adapt these elements to your current needs, and introduce a new plan that will hopefully deliver the same great results to your organisation. Time for the Compensation professional to move into design mode !


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