When it comes to bonus schemes the old adage “you’re getting what you’re paying for” is as true as always. Managers, linear, logical and predictable as we have always been, (we were rather unlikely to have become managers if being otherwise) are struggling to find the ideal, universally accepted bonus scheme that would fit in most markets, product lines, and times and so on. Pretty often, as time shows, we end up making a number of errors translated in wasted resources in the best case and combined with unwanted results in the worst. Below you can find a dozen of the most frequent mistakes witnessed.

1)      Same schemes across all company regardless of product line, type of business… I happened to know once a multinational who wanted to implement the same system in more than ten different countries with field forces ranging from as little as 4 sales persons to others having 100. (In addition it sends a one fits all message. Ouch!) If that is your case please invite your people to believe that each of his customers has to receive an individual approach!

2)     Conflict with overall strategy of the company. Pretty much like: “we want THIS… but reward THAT”.

a)     For example we are stressing during all meetings that we want people to co-operate and enjoy teamwork, however when it comes to paying on performance team has disappeared from landscape.

b)     Or, even worse, we reward the team as line (group of people promoting the same group of products), although we want them (or it makes more economic sense) to work closely in the region.

c)      We want special focus on newly launched products; however we put strong weight on overall turnover.

d)     We want long term focus (customer development) but we reward short term results (easier to measure, isn’t it?).

e)     We want results but we pay for activity (also because we think we are pretty good at measuring that too; just got new CRM implemented).

f)       We want quality in promotion; however we make heroes those bringing the fastest results.

g)     We value personal development; however we are paying only on results.

3)     The bonus schemes either change too often (especially difficult when they are really complicated, so by the time people start understanding them they’re gone!) or they never change as if they were carved in stone. Products come go, priorities change, promotion model change, the market change but not the incentive system (…it was here before we came!).

4)     Bonus system is too difficult to be understood or remembered! Here there are two tests! First: does it fit on a business card? I am serious! OK… on both sides! Second: if your sales person is to spend one hour more today to get some extra money does she know where to spend it to maximize return? Or, put it differently, if she chooses to sell now EUR 1000 more, can she tell how much is going to get as reward? This goes pretty well with the slogan: “We encourage simplicity in everything we are doing!”

(the rest will show up during the following days)

Filed under: Field Force Managers, Sales Force Effectiveness by admin