BrainTrust Query: Why Your Incentive Plan Might Be Killing Sales
Commentary by Doug Stephens, President, Retail Prophet
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.
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?