Too big for your customer?

I have teamed up with a friend to develop the Consulting & Training practice launched 5 years back. In the week just ended we visited a dozen accounts to make presentations on the solutions offered by us – we offered solutions from my portfolio and from his range of IT solutions.

Looking back at the work done over the last 5 days, and the response received from various organisations, it dawned on us that we could have done this much earlier. For many months we had subcontracted this work to the junior members of our team and they were delivering results that were way below our expectations.

Our businesses were suffering from a major disease – neglect by the leader. We decided that it is time to make amends – let me add here that we were pushed to this decision by the fast depleting order-book and the inability of our team to prime the prospect pipeline at the desired rate.

There comes a time in a professional’s life when he believes that meeting customers is a job meant for front-liners. These hotshots believe that the role of the Big Boss is to sit in a quiet and comfortable room far from the market and from thence send out commands to the front; he also believes that only such isolation permits development of ideas and strategies. They just need MIS and the reports generated by the foot soldiers; not for them the hassle of travelling to remote locations or the “inconvenience” of calling on a client.

And then, slowly at first and rapidly later on, they lose touch with reality. They live on past knowledge. The junior team-members recognise this soon enough and fill the leader’s eager ears with information of the kind he wishes to hear – and that would be far removed from ground realities. But for the hotshot who has isolated himself from the market it sounds like gospel truth. Your team could be burning valuable resources, such as time and money, by chasing the wrong prospects and by offering deeper discounts that is warranted. They could probably be compromising your business by giving commitments they are not empowered to and wouldn’t be working as hard as they are expected to; but their reports wouldn’t say anything. And the real feedback from customers probably isn’t reaching you either.

Only when a huge crisis lands like a steaming hot potato into his by-now tender palms would the Boss wake up and smell the coffee.

Do we need to reach such a state?

My friend and I realized soon enough that even to direct our team there is need to see what’s happening out there. By permitting second-hand news to fill our ears we run the risk of sending the team the wrong way – and in extreme scenario run our business to the ground.

As the leader you can strategise and make informed decisions only when you know the market first hand and when you know what the customer is thinking / talking about you and your rivals. You will also be able to direct your team and get them to achieve desired results by being in the know of things.

Get up and go out into the market, Hotshot! Remember, you are never too big to visit a customer!

Reviews – Think ahead

September 30 is halfway mark of the business year for most companies in India.

Many Business Managers across the nation would soon be sitting with their team-members for formal or informal reviews of performance in the six months that have gone by.

Thought I should share some thoughts on the subject with them.

Reviews are good times to value-add and to look to the future. That sounds contrarian, doesn’t it?

One would think that a review is the right time to look back and to tell people where they stand, based on the findings. But living in the past will get us nowhere!

The review you conduct should be forward-thinking – treat your team as live resources who would continue producing good results for the organisation; if you treat them like dead-meat, cattle ready for the slaughter, there would be a lot of blood on your hands and a bunch of lifeless people to work with.

The meeting should be fact-based, your expectations realistic and the mood positive.

It’s best to ask the person first to give her/his impression on the half-year’s performance. If they have done well be effusive while offering congratulations and ask how they can maintain or exceed the pace – push them to exceed expectations by a large margin – but try not to reset budgets (unless market conditions or any other factor has necessitated the change), because that can be counter-productive. If you have a proper reason to change the budget it needs to be stated upfront and the person should stay charged for the period ahead.

While increasing targets you also need to confirm what additional inputs and incentives are being provided for achieving the bigger number.

If there is a shortfall in results against the target set you need to take into cognizance the reasons for such performance and how that can be avoided going forward. While discussing variances with a team-member, who has not been up to scratch, confirm that it was not a case of slackness or lack of effort. If there has been undue delay or spillover of some orders into the next half-year period you should consider giving the person the benefit of the doubt – probably the shortfall is on account of the non-availability of inputs and support from you or the organisation.

But there is no place for the slacker in your team – this message has to go across in unequivocal terms.

Remember, these days jobs are hard to come by, but so are competent people. You should not be afraid of delivering bad news; however, do so only when you are sure the person is incapable of giving you the expected results. Removing or replacing people should happen only after all other methods have been explored. It is not easy to recruit a new person and bring him up to speed in a short time.

Conduct the conversation in a cordial atmosphere and ensure all decisions are based on facts – discuss events and outcomes and how repeats of disasters can be avoided. Don’t blame the person, but focus on the actions and behaviours – work on the elements that can be corrected.

Ensure that the discussions are recorded and all parties concerned have clarity on what is to be achieved – the documents should outline who will do what, by when, and what support is to be provided.

The meeting should end on a high and the team-members should return to work feeling totally charged.

When you sit with your team for the review early next month use facts to motivate better performance in the six month period. Think business wins, not personal wins!

Spell it out!

I watched a Business Owner in action earlier today – the owner of a small business does not have the privilege of appointing Heads for various functions and has to take on multiple roles; in the situation I witnessed he was playing the role of  Sales Head. He owns an IT Solutions Consultancy which studies needs, recommends solutions, supplies the necessary boxes and accessories and helps in the implementation of the solutions – all customized to the client’s needs. The business has a huge post-sale support component. In fact after-sales support formed a significant portion of their income.

Bulk of their business came from a few large customers – in fact 3/4 th of their revenue is recurring business from these accounts. While on the one hand this could be considered a plus and an indicator of high standard of support provided by his team, the Business Owner was a bit worried too because any slip would mean a huge drop in income – they were hugely dependent on this set of accounts and these large accounts used the quantum of business provided as a bargaining chip – margins were thin. It was a twin-edged sword and my friend did not like it.

His focus during the review meeting was on the following:

– Maintain service – standards so that customers have nothing complain about

– Constantly be on the lookout for more business from these accounts

– Renew all Annual Maintenance contracts

– Seek new customers – to reduce dependence on a small set of accounts

– Close Maintenance Contracts from accounts they have not serviced so far

The meeting was conducted in two phases – he first had the entire team in the room and gave them the priorities for the year, the Sales Targets and incentive plans – so the team was clear about the Business Objectives and knew what they could gain by achieving the numbers.

Then he called each team member separately for a one-on-one – in this round the focus was on the performance of this individual and what was expected off him in the months ahead.

The first man called into the room was the senior-most member – someone the Chief Executive trusted a lot. He was asked to report on the performance of the 3 new recruits, who have been in the system for 1 to 3 months, and the fourth person who had been there for over a year. The new players were still diffident to meet customers; they were spending time at the office under the pretext of preparation or infrequently going out in pairs. The more senior guy was focusing only on service and didn’t bring in any new business. So it was apparent to the owner that business was happening more by enquiries from prospective buyers than by Sales push.

He then delivered the ultimatum to the Senior Pro – “You are the Project Manager here – that is not a decoration. It is to be proven through operational excellence. Drive the business and bring me the results expected off you. If you see guys in the office chase them out. I don’t have time to get into the frontline action. That is your role. But, I would like to see you do that and get the guys to deliver results.”

The date by which the changes were expected was also conveyed.

The next guy in was the experienced hand. He was told to stop playing safe and asked to look for new business. The incentive program was tilted in favour of new business acquisition and so he could expect a growth in income only by pushing for that.

The 3 new guys were quizzed on product knowledge and comfort level on dealing with clients. Only one man seemed uncertain and he was detailed to work with the senior guy for 2 weeks, after which he would be out on his own. The other two were told to work as a team for the first 2 weeks and then they too would work alone.

All three were given a 2 week deadline to get set for action and then a month’s time after that to bring their first order. All three had been in the system for at least a month and had previous experience before joining this organisation. Hence, it was fair to expect them to deliver results within three months.

The Chief Executive is aware of the longer lifestyle required in this business and hence expected order either by way of new business, repeat business or  maintenance contract. It was a fair deal. All team-members were also told that the organisation cannot carry passengers for too long – they have to deliver business in the short-term.

There is lot more that can be done to get this team working in peak form, but this is a good first step. There was clarity in target, expectation and the benefits available to them for good performance.

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Looking over the shoulder

(Characters described in this article are not real – there would be people like them in the real world but the descriptors used here are not associated with any person I know bearing that name.)

James is irritated. He is out in the market, making a planned visit. No! That is not the cause of his irritation. It is the fifth client call he is making in the day and his Business Head, Manoj, has been tagging along with him all day. Now, that is the reason for his annoyance.

Manoj was supportive and a good Supervisor Officer in many ways, but for one major flaw.  He micro – managed! He had to verify and cross-check everything. The only relief for the team – members was that they were seven in number and it took a while before it was any one person’s turn again. “Torture” was the codename used by James and his colleagues for this day of joint-visits.

James and his friends were experienced hands and at most times they were on top of the job – Manoj supported their efforts by providing the necessary inputs, be it budgets or getting the support needed from their Head Office. James and his colleagues did not mind Manoj involvement in the planning and review processes. They also knew that Manoj could contribute in major deals and in meetings with Senior Officials and were happy to taking him along on such occasions. It was only when Manoj took an active role in every little activity that it became an irritation.

These are a few of the ways managers like Manoj can disrupt their team’s peace-of-mind:

1. He would visit a customer and ask questions to cross-check the information shared by the team-member during the review conducted back at the office, every tiny detail. This would be repeated all day.
2. He had to spend the day at the venue where a Sales Executive was conducting a promotional activity– not just to witness the proceedings but to get involved in the nity-gritties.
3. He would ask a team – member to provide the list of calls planned for the day and then ask whom they proposed to meet and what was to be discussed during the visit.

How many coffee breaks did you take today? How much time was spent to reach the customer’s office? You get the picture.

Why do Managers micro-manage?

The main reason for this is lack of trust. Many managers are not comfortable leaving the task to a junior officer because they think the person is not capable of doing the job. These managers believe that only they have the experience and skill to do it competently.  They worry that things can go wrong when they are not involved.

They are also afraid of losing control; what if the team-members start doing things on their own and don’t come to him for support? Won’t he then become redundant? And what if the team-member messes it up and he is not able to find out?

Some managers wish to stay in the familiar territory they used to be in – which is Operations. Their micro-management is a ploy to stay in touch with what they enjoyed previously. It would be best for such managers to add a component of field work to their daily routine and that should be done alone instead of disturbing a junior official.

Well, managers definitely need to know what their team-members are doing:

–          they need to make field visits with each member of the team,

–          visit the venue where promotional activities are being conducted,

–          even check who they are visiting and what questions are being asked.

But, should that be done for every call and every activity? Won’t that demoralize his team?

Manoj would have very experienced and committed team-members who need not be guided every step of the way – and by close-managing he not only loses respect, but causes them a lot of agony. If there is a low- performer or new recruit some hand-holding and close monitoring would be acceptable – but if he is smart even that task could be delegated to a senior hand in his team.

One can understand James’ agony. Looking over a team-member’s shoulder too often can only make the person nervous and irritated.

Managers like Manoj need to learn to trust people and relax some more. They need to let go and permit the team to do things their way – if things go out of control they can cut in anytime and get the situation back on track. A bit of Coaching would be useful to get them rid of this habit.

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360 Degree dis-Service?

Kumar returned to India after working for more than a decade in another country – having gained experience in the Advertising Business there he decided to stick close the knitting and picked a job in the same domain back in his hometown. He heads Sales for a new Advertising Agency, which was launched less than a year back, and has made a mark in the South Indian metro towns. The promoters convinced a few clients that they had developed for their previous employers to move and used that as a launch pad.

Kumar has been entrusted with the task of building the organisation’s business in Kerala. He and team have been struggling to make a foothold – they have had a few small successes and did they take a page from the founders’ book when they employed Business Development Executives locally? He mentioned that couple of the new recruits in his team brought along accounts grabbed from their former employers. Is that a healthy practice?

I thought Kumar’s agency was focusing on mainline advertising services and probably couple of allied activities given that they were a new. Before asking him about their portfolio I went to the extent of suggesting that since they were not a well entrenched player in an already crowded marketplace it would probably make sense to get into strategic alliances with local professionals who specialized in some niche areas – so that they could collectively offer a portfolio of services to the clients.

But Kumar responded that his organisation took great pride in offering “360 degree” service (A Full Service Agency!) to its clients – which meant that they offered mainline press and TV advertising, research, outdoor, promotions, event management, public relations, and social media – The Works including bells and whistles!

It sounds fantastic and would look good on paper too!

It’s great for a new agency to be able to say that they can do all that for the client, but can they do it? Many of the national players and some well-established local agencies ruled this market and Kumar had already indicated that the response from prospects has not been so encouraging.

A few questions cropped up in my mind –

–          Did they have the bandwidth to offer such services?

–          How would they be able to win over talent from the bigger agencies?

–          What was the body of work available to show the prospective clients?

–          Did they have all the tie-ups needed to offer the services mentioned?

–          Did the promoters have the deep pockets to handle a large team and operations?

–          Did it make sense to offer everything – or did their client expect it?

Does it make sense for this new agency to launch a few services at a time and prove themselves there before offering the next set of services?

Well, clients are willing to move if they don’t get good service – so Kumar and team did manage to attract a few and now they have the big challenge of meeting the expectations. The same clients would move away or go back to the old agency if they aren’t kept happy. Does it make sense for this new agency to reinvent the wheel? Is in-house talent needed in every activity?

Kumar indicated that the market was in recession and clients were not just cutting down on publicity but also unwilling to test a new agency – they preferred a known devil to an unknown angel. In such a scenario does it make sense to invest in a large team?

I could be wrong, but I came away from the meeting thinking that this new agency was employing a high-risk strategy – weren’t they stretching themselves too thin just to appear good?

What are your thoughts?

Bad weather!

The Chief Executive of a small software development unit walks into the office finds a file left open on the discussion table and immediately shouts at the top of his voice: “Can’t anyone work properly around here? Why are things not kept at the proper place?  Do I have to put up with such stupidity always?”

Two of his employees, out of his line of vision and earshot, looked at each other and grimaced – one said: “Another nightmarish day in office it seems.”

The other replied, “Thank God he does not turn up often.”

The Chief Executive called out the name of one of deputies and the person dragged  himself the Boss’ cabin reluctantly,  looking like a sacrificial goat.

“What happened to the proposal that was to go this morning?”

“I am putting the finishing touches – it will be sent to you for verification in a few minutes” said the man.

“You are not just incompetent, irresponsible too. I am going to put an end to this by terminating you. Go back and send me that file if you don’t want to get thrown out.”

The draft proposal reaches the Manager in a little while and within minutes of reading it he shouts for the hapless employee once again; points out 4-5 errors and says:

“You have been here for 2 months – why haven’t you learnt what is to be done? Do I have to do everything here? I know nobody in this organisation is going to be as good as I am. Still is it wrong to expect some level of skill and commitment from the rest of you.”

And thus went a typical day in that small outfit.

The Chief was hardly available in office – he travelled across the world in pursuit of various interests which went beyond software. He did not spend time in training and coaching the employees. They were just allocated tasks and expected to deliver results. Hardly anyone in his team had direct contact with the end customer because the Chief felt permitting such interactions would reduce his hold on the business.

Even when he was in the city the contact with his office was maintained on the phone and most times the conversations were one way – he was issuing instructions and the employees had to execute what was told. The employees usually found his explanations long-winded and confusing. He was not able to simplify the task for them. But nobody dared to ask questions fearing a backlash.

In order to keep his costs low this businessman recruited people with just the basic skill requirements and pushed them hard to deliver his expectations. He never invested in providing them any additional training nor did he permit them to speak with the clients to understand their requirements with greater clarity. He expected them to pick up skills on their own and keep doing what was asked off them.

It is not difficult to see why they are not able to deliver. They had not been trained or coached, nor were they motivated to perform. They have not been given any encouragement or recognition for the work done, nor were they given the opportunity to learn from their mistakes.

To top it all he barked at them and did not attempt to build relationship or trust. He was absent at most times and made the team wish he would never ever step in. Such behaviour puts them on the defensive and even distracts them to the extent of making mistakes when they worked.

He was putting into play a destructive cycle of fear, demotivation and inefficiency.

He lost no opportunity to say that he was way better than they could ever aspire to be and never gave them opportunities to benefit from his knowledge.

I have been a nasty with some of my subordinates in the past and seen firsthand how my behaviour and words impacted them. I know such acts cannot be reversed and sometimes can leave permanent scars on the minds of people who receive such treatment.

It’s tough to change such people because they see nothing wrong in their own behaviour. Only when people start leaving them or when such behaviour gets a rude retaliation from someone that it dawns on them.

Anger, ego and rudeness are like bad weather … they cause a lot of pain and leave a trail of destruction!

P.S: I have not recommended any solution or remedy here because the answers are obvious to any sensible person.

Who gets the Spoils?

I have worked with more than one organisation where, after the incentives and bonuses are declared, people who didn’t make the cut grumbled among themselves about the unjust review systems and totally lopsided incentives program that were implemented by the Top Management.

And this is a routine occurrence at many organisations across the country. How I wish managements had spent time to read this amazing book ‘Execution’ that I reviewed just 2 days back. The book highlights the lacunae in the conventional Reward and Recognition programs adopted by most leading organisations.

Incentives have a flat structure – numbers are allocated to each resource without taking into account the factors that are relevant to the team-member’s market. Even if the factors are taken into cognizance the additional load in targets is not commensurate with the increased opportunities in the role-holder’s market. And usually the programs do not recognise efforts taken to Cut Costs or Revenue Enhancement activities undertaken by an individual. The targets are usually uni-dimensional.

Employees feel inspired and motivated when their talent and high-quality output get noticed and rewarded. Managers who notice, recognise and promote quality talent are able to retain people much longer. Dissatisfaction usually rises when everyone is measured the same yardstick and the reward system tries to please the lowest common denominator.

An employee who is working in a mature market with many competitors and another employee who is working in a new market with huge opportunities and few competitors should not be measured the same way. There could be a 3rd person who at the end of the year failed to reach fresh sale targets but had excelled in huge process optimization, cost cutting and added revenue on after-sale service.

In the conventional system the 3^rd person would not get any incentive, the second person would get graded the best and walk away with the highest rewards and the first person would also make the cut and get an incentive, but lower than the second employee.

If a thorough analysis of the performance is made based on quality of effort, use of innovative methods and degree of difficulty in addition to the regular yardsticks you will find that the 3^rd employee has delivered the best results and the 2^nd guy the least.

Organisations need to worry when they are promoting mediocrity. In order to retain quality talent organisations have to innovate and adopt exciting people practices that recognise and reward merit … one size does not fit all and pleasing everyone is not the best way to stay productive and profitable.

Spoil your best talent with The Goodies and they will keep performing at their best!

P.S.: I agree that Sales Incentives and Bonuses become due only when the organisation is profitable, but it wouldn’t be fair to penalise performers when the rest of the team fails.

Status Update

We are into June 2012, the 3^rd month of Quarter-1; isn’t it time to make a quick assessment of the progress made in the last 2 months.

If the going has been great on all parameters … CONGRATULATIONS! You have done well.

If you have achieved your Sales target but not on a few other major KRA items, then a smaller Congrats! … because you are not fully there yet.

And for those who are behind on most of the parameters … No need to feel defeated. But it is time to regroup and push harder.

To Sales Executives:

– Analyse the orders won: Who is buying? What products are selling?

– Have all products been promoted as planned? Are you on target in all products?

– How good is the order pipe-line? Do you have enough prospects to get you there?

– Have you appointed Channel Partners as planned and are they fully functional?

– Are all the Channel Partners well-staffed and implementing the Business Plan as promised?

– Are your promotional activities taking place as planned? Have you analysed the results?

– Are you making the planned number of Sales visits? How many visits are needed to get you to the close?

– How good is your prospect-to-order ratio?

Make an honest assessment of the situation:

– Don’t gloss over the data? Living in a fool’s paradise will get you nowhere.

– Assess where you are falling short and what needs to be done to cover the shortfall?

– Are you short on any skill? Do you need training to cover that deficiency?

– Do any of your Channel Partners or their team-members need to be trained or coached?

To Managers:

– Remember to Congratulate all the performers

– Sit with each team-member and go through the data

– Bring out the key messages and get buy-in for the corrective action planned

– Show the laggards where they are falling short and tell them how to pull things back on track

– Conduct the meeting in an constructive way; review like you wish to be reviewed

– Tell the slackers, in no uncertain terms, that less than 100% effort is unacceptable

–  Coach or arrange training for the team – members who are genuinely weak in any skill area.

– Closely monitor performance through the month – a performance tracker board will be useful

Channel Managers can do a similar review for each Channel Partner; Key Account Managers can do an Account-wise analysis.

Thorough Variance Analysis followed by a realistic and robust Action Plan topped with timely follow-through will ensure that you achieve satisfactory results at the end of the Quarter.

All the best!

Killing the Golden Goose

Isn’t it easy when you have a readymade set of people to lay all blame on? Sales organisations often resort to depositing their trouble at the doorsteps of the Channel Partners.

–          Sales figures are low

–          Market reach is poor

–          Entire range of products are not being sold

–          Customer are complaining about products

–          Visibility is low in the market

Blame the current Channel Partners … is a convenient answer.

And how do we solve this problem? Appoint another Channel Partner!

That is the panacea for all the problems because “I am Ok, you are not Ok!”

How many Channel Sales Managers have spent quality time with their Channel Partners to create a robust Business Plan and then followed it up for an entire year?

I have seen operating such plans successfully in my 12 years in the telecom domain. There are times when the senior management has come down harshly on the local team, during reviews. Poor Sales and insufficient market coverage are the stated concerns – the quick-fix solution suggested is: Appoint new Channel Partners because the present set are not performing.

The reasons stated are:

–          They have become too complacent

–          They take things for granted

–          We can’t depend on a few people

–          We are playing into their hands

–          They will not provide the inputs as expected

To reduce risk and to protect own turf companies appoint more channel than is necessary. But the opposite usually happens. The pie gets divided too thin and the partners start grumbling, they don’t see money in the business and hence can’t commit the large teams or the necessary level of activity in the market.

Soon the Principal is cribbing again – “Let’s look for more partners!”

But some middle level managers have stood their ground and said that such a strategy would erode Channel Partner confidence and it’s extremely short-term in nature. They defend the existing Channel Partners by presenting their track-record and the reasons for the blip – either on account of insufficient manpower or on account of leadership. The Manager would have had a Corrective Action meeting with the Channels in question and the fixes were being put in place.

At such a time, instead of helping them regroup, if new appointments were made, it would lead to conflict and even termination of a long – term relationship. I have been witness to the loss of some good quality partners on account of short-sighted decisions.

Dear Big Business House, you aren’t the only smart one around! The other side is thinking too and they are capable of taking decisions too. There has to be a balance – Yes, it is possible that some markets are not being covered sufficiently and maybe some Channel Partners are taking it too easy.

The first step is to study the situation and provide evidence of the shortfalls; it’s possible that the Channel Partner has lost interest and found some other business that is much more exciting and profitable. He thinks that would give him better returns than your business. If that is the case, it’s best to part as friends or alternately ask them to allocate enough time, money and effort to your business too.

After that’s agreed upon the next step would be to create a plan to recover from the dip and action it. The Channel Partner needs to commit to this and take ownership; often some of them play the absentee partner and dump the job of managing the business on the shoulders of the Channel Sales Manager. Abdication should not be accepted – his presence in the business is essential to get commitment from his team members.

The Channel Sales Manager needs to keep his or her part of the deal too – provide the necessary support and the promised inputs, review the recovery plan regularly and coach the Channel Partner and his team whenever necessary.

If you create an atmosphere of trust and understanding your Channel Partners would respond in kind. Remember, they are in it for money too; if they see their investment being eroded without any hope of returns then they would leave the business.

Good Channel Partners are not easy to find – you may need to create them; and when that is done it’s best to hold onto them than to start looking for another one.

A Goose in hand is worth much more than the new one you are trying to hatch!

Share the loot fairly!

I am aware that the title has a negative connotation, but so has the thinking behind decisions that are unfair to one’s own high-performers.

Sales Teams work all year to achieve targets, to win accolades and to earn that extra slice of income called Sales Incentives.

Companies announce Incentive Schemes with great fanfare – there are posters, buntings, handouts and communiqués from the Top Brass and regular reminders from the managers on the booty awaiting the winners. At the end of the year, when it’s time to hand out the goodies clauses and conditions appear out of nowhere saying why the award cannot be given as expected.

I remember an incentive dispute involving a friend who got a huge order in March and since the required products were not in stock billing was not possible; the order was not included in his performance because bills would be raised only in the next financial year – and in the year that followed the incentive scheme announced was for Orders Closed and Billed during the year. My friend was gutted – he sent representations to the Top Management through his Sales Manager but was refused his reward because the organisation made clever use of the term “need to be fair & just” – they said that many employees will have to be given the privilege and such additional payments have not been provisioned.

What the Heads did not realise was that there was a mutiny brewing in the ranks and many disappointed achievers left the organisation soon after the unfair treatment meted out to them.

Haven’t we seen Pirate / Bank Heist movies in which the partners in crime change colour after they lay hands on the money and gang-up among themselves to eliminate a few in order increase own share?

That comparison is a bit stretched – but organisations need to be aware of the harm they can do by refusing the promised dues.

– Incentive Schemes have to be defined well.

The targets, the benefits and conditions should be clearly spelt out and informed as soon as the new performance period begins, in order to give the team the whole year to achieve their goals and goodies.

– Targets should be set after thorough analysis of market and opportunity

Business Objectives, Markets Conditions, Previous Performance, Size of Opportunity, Product availability and Government Policies that impact the market need to be studied to set a fair target for the year.

– Targets should be challenging but shouldn’t discourage pursuit

Targets are usually set keeping companies business objectives in mind – but they should not be such that the team gets demotivated rather than being excited to go for it.

– Reset targets when market conditions change,  but only for the remaining period

Often markets conditions improve due to internal or external factors and it provides a huge boost to sales; companies then reset targets for the entire financial ignoring the difficult period that prevailed earlier.  Such ad hoc ramping up of numbers can be a disincentive.

Downward reset of target is not recommended because there is no room for incentive if the company is unable to achieve business objectives

Some questions that Leadership often ask when it’s time to pay-up:

–          Has the Sales Executive really worked to earn so much?

–           Does the person deserve such a large sum of money?

–          Can we afford to pay so much?

If they felt that the employee has not worked why was he not informed about it earlier; how come they become aware of this while calculating incentives? Deserving or not deserving is an emotional question lacking any logic. The Scheme has conditions and if they are met there is no need for further questions.

The matter of affordance was to be worked out when the scheme was created – if the organisation has a policy on what can be spent to acquire a sale the same can be used as the guiding principle for setting incentive amounts and budgets. Employees can be told in advance that if deep discounts are given for acquiring a sale it can impact their incentive payout – if such details are spelt out at the very beginning there is no room for ambiguity or disputes.

Blaming or penalizing an employee for poor planning by Management can be counter-productive. Let the Incentive Scheme not become a disincentive!

Don’t refuse the carrot and get the stick!

Incentives Schemes are created to drive performance – they motivate employees to go for more. When the good work is down the goodies need to be handed over with a lot of fanfare and appreciation. Fair treatment will promote further improvement in performance.