Sales professionals should be and expect to be compensated based on their results. In fact the more confident the sales professional is, the more they’ll push for less guaranteed money (base salary) and a higher commission percentage.
We think that companies should also implement incentives for non-sales employees. In order for financial incentives to be effective as a motivator of performance, employees must understand the goals of the incentives. They must believe they can impact the outcomes. Employee must also trust management to do what they say they are going to do.
Below is a list of mistakes companies make when developing incentive bonus plans for non-sales employees.
- They don’t consider the unintended consequences. For example, over-incentivizing volume of work can easily result in a drop in quality. In addition, over-emphasis on individual contributions can discourage teamwork and collaboration.
- They assume all people are motivated by money. Some people are more motivated by other things, like work-life balance, than they are achieving that bonus. If you want financial incentives to drive higher levels of productivity, you better hire people who are motivated by financial incentives. Utilize a pre-employment assessment that will tell you how important money and achievement are to a candidate.
- They create entitlements not motivators. Safety bonuses or attendance bonuses, for example, can easily morph into another line on the paycheck that the employee doesn’t really think about. It may not really be motivating them to work safely or to show up for work.
- There is no feedback. Want to get more bang for your bonus check’s buck? Spend a few minutes reviewing with the employee what they did to earn it and how they could get an even bigger bonus next time. Feedback can be just as motivating as a bonus.
- They unintentionally create a compliance issue. If your company pays bonuses or commissions to non-exempt employees for being on-call or for achieving a production goal, there is a good chance you are calculating their overtime pay incorrectly. Your incentive bonus plan might be working, but you might be creating a costly liability if faced with a wage and hour audit.
A well-designed, self-financing incentive bonus or commission plan can indeed provide powerful motivators for your non-sales personnel. Just make sure the incentives are simple to understand, easily calculated and the employee can control the outcome. These incentive programs should be accompanied by meaningful. Of course, they should be compliant.
Contact the Davidson Group to discuss how to create and implement a motivating incentive plan for non-sales employees.
