BrainTrust Query: Why Your Incentive Plan Might Be Killing Sales
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Prophet Consulting blog.
Daniel Pink's most recent work, "Drive: The Surprising Truth About What Motivates Us," suggests that traditional do-this-get-that reward systems not only often have a minimal effect on performance but can actually have a negative and stifling impact on work that relies on creativity and problem solving.
Surprisingly, many of the incentive and performance schemes companies operate with today actually have their roots in the post-industrial revolution school of thought known as scientific management, originated over a century ago. Focusing largely on manual tasks, traditional incentives based on rewards and losses worked because the tasks in question were largely functional in nature, e.g.: produce 10 more units per hour and get an extra ten dollars. What more contemporary studies reveal, however, is that these same kinds of external stimuli tend not to work when the task at hand involves creating, innovating or problem solving.
Instead, suggests Mr. Pink, once people are being paid adequately and fairly, so as to take the issue of money off the table, companies should really focus their attention on the higher human needs to motivate creative workers. What are those higher needs? Mr. Pink suggests that the autonomy to own one's work, opportunity to develop mastery at what we do and, above all, a sense of purpose greater than ourselves are the true drivers of performance.
I would argue that active selling -- not to be confused with passive service -- requires significant creativity and problem solving ability. Unlike a service role, a true salesperson operates under dynamic circumstances with each customer's needs being slightly different than the next. They rely on their creativity and ingenuity to develop unique product and service solutions to meet each of those needs. Selling, if done well, is hardly a routine endeavor and yet for over a century we've been incentivising salespeople as though they worked on an assembly line!
So the question for retail H.R. professionals is, how does your organization characterize the sales role in your stores? Is it seen as a largely menial, repetitive and systematic function? Or is it seen as a dynamic and creatively centered position?
This alignment of leadership on these fundamental expectations of the sales function is critical. Until the experience they hope to deliver to consumers is determined, a retailer can't fully articulate the organizational expectations of their salespeople. And without clear expectations, stores can't properly design a system to motivate the right behaviors. In fact, the incentives might actually de-motivate the behaviors stores most want to promote.
Discussion Questions: Are the traditional carrot and stick types of incentive plans adequately motivating retail sales associates? With technology increasingly taking care of in-store tasks, should management's expectations of the sales role be evolving? Are there any retailers you regard as progressive in their approach to employee performance management?