Why Incentive Programmes Fail

12 February 2016

A corporate rewards programme can light a fire under a sales team, electrifying performance and rewriting the way reps approach prospects, align with buying processes and close deals. Offering your teams the carrot rather than the stick has the potential for massive impact on the way they work, and offering incentives beyond their standard monthly pay packet might just inspire them to push a little harder, reach a little further and climb a little higher.

Sound great, right? But we often find ourselves talking to frustrated sales leaders who feel like the time and money they are investing in their incentive programme is simply failing to return any real value. Some even feel as if, rather than promoting and encouraging exceptional performance, their rewards programme actively contributes to lowering staff morale.

Knowing the potential for positive impact but failing to see it materialise can be incredibly disheartening for sales leaders, and can make justifying rewards programmes difficult. Directors, finance or procurement heads aren’t known for being forgiving when ROIs fall short, and a lot of incentive programmes get shot down or stuck in the mud before they ever really get rolling.

Luckily, this whole situation is avoidable. Learn the pitfalls for rewards programmes, and you’ll be able to structure, implement and justify your incentives properly, regardless of who is asking you the tough questions. The key to succeeding here is to know why some fail—so let’s dive in.

1. They fail because they prioritise profits over business objectives.

There are lots of ways that your sales reps use their time to better your organisation and add value. Lots of those ways don’t directly result in money being brought into your company, but they remain absolutely essential. Badly put together incentive programmes push reps to prioritise conversions over all other business objectives, including ramping up new hires, developing skill sets, nurturing pipeline, keeping up with ongoing accounts and more.

2.They fail because they are divisive.

Organisational strength comes as a result of combined success. Badly organised corporate rewards programmes ask people to compete as individuals against the other members of their team. That creates division within teams, unwillingness to take on more difficult accounts, and bad feeling. Incentives can also change the relationship between reps and their leaders, making reporting less transparent and relationships less open, as people prioritise appearing competent and high achieving over honesty.

3. They fail because of failures in performance evaluation.

Nothing breeds resentment and low morale more quickly in an incentivised workforce than reps succeeding but failing to be recognised for it. Too often, reps fall through the cracks in their organisation’s performance evaluation process. The key here is to build a robust process around your primary business objectives. Make sure you’re measuring the things that matter to you, and make sure you’re doing it thoroughly so no one is missing out.

4. They fail because projections—results = a morale gap.

Whether we’re talking forecasts from team leaders or reps’ quarterly targets, projections cause massive problems with incentive programmes. In the modern sales organisation, teams tend to get handed inflated targets from finance, and leaders tend to give inflated forecasts to buy themselves a bit of breathing room. That gives reps an unrealistic sense of how well they could be doing, and also informs the shape, structure and targets of incentive programmes. The gap between the reps ‘targets’ (often more of a wish list) and their results can create massive damage to morale and strained relationships between reps and leaders—problems only exacerbated by incentivising performance.

5. They fail because the wrong incentives are used.

As the American psychologist Frederick Herzberg said, “just because too little money can irritate and demotivate does not mean that more money will bring about increased satisfaction, much less increased motivation”. Despite 64% of people saying they would prefer cash to other reward systems at work in a 2014 BI Worldwide report, the same research found that cash is seen as a cold, value-less reward. It also found that 80% of cash rewards get swallowed up by day-to-day living costs, with only 20% being spent on rewards. Incentive travel and events, alternatively, can create genuine anticipation and excitement, more lasting motivation, stronger relationships and improved office cultures.

Incentive programmes can be a genuinely valuable, popular and sustainable motivator in your organisation. Programmes and incentives can—and should—be tailored by department, and often even by team. The right incentives, structured and delivered in the right way, can make a huge difference to morale, engagement and performance. We’d love to talk to you about how we can help deliver those incentives—drop us a line through the contact page now.