Traditionally, sales incentives have been heavily - if not exclusively - focused on individual performance. This reflects the long-held stereotype of the lone wolf salesperson, working independently to develop customer relationships and secure sales.
Times have changed though, and the sales process for many organizations (particularly in the B2B world) is becoming longer and more complex, increasingly requiring teams of sales and sales support people working together to bring business in. The resulting reality: More organizations are facing the question of whether team-based incentives should be an element of their sales compensation plan.
Addressing this question requires a deep look at many elements of how your company approaches and staffs the sales process. In their WorldatWork article Are Team-Based Incentive Measures Right for Your Sales Organization?, Sibson consultants Sheila McCarthy and Shalin Sharma identify three important aspects of answering that question:
Recognizing a Team-Based Sales Organization. McCarthy and Sharma talk about the need to look at how the work of sales individuals and teams comes together to drive business. I find that conversations with a representative group of sales managers and staff can help shed light on the sales strategy by fleshing out the real nature of the selling process and the degree to which multiple roles contribute to the successful sale.
Selecting the Best Measures at the Team Level. If the step above leads you to the conclusion that there is, indeed, a team element to the successful sale, then which metrics should be used to reflect team versus individual performance? Measuring the multi-faceted sales process is a challenge, given that the ideal plan should include no more than three metrics.
Finding the Right Balance. As a company moves from a purely individual-based sales incentive to the introduction of team metrics, how do you find the optimal balance between the two elements? McCarthy and Sharma wisely advise that a company transition their mix of metrics conservatively, allowing the organization and the sales staff time to become more comfortable with team-based measurement.
It is also critical, however, to look beyond the good reward design guidance highlighted above at the underlying talent and motivational issues. Research suggests that salespeople differ from non-sales staff in some key ways. Not only are they (surprise!) more motivated by financial compensation (82% versus 62% for non-sales employees), but they also tend to:
- Be more engaged (57% versus 51%)
- Be more committed to their companies (68% versus 62%)
- Have higher career satisfaction (57% versus 52%)
I believe there is a connection between the higher engagement and career satisfaction of salespeople and the kind of direct feedback, recognition and reinforcement provided by a compensation program heavily leveraged in favor of quantifiable individual results. And that there is further connection between the historically typical individual-based sales compensation plan and the type of person who pursues and succeeds in a sales career.
And my point is simply that we need to be mindful of these things. Switching up the compensation plan without a good look at things like...
- The skill sets, work styles and competencies of our current sales population
- What motivates, engages and drives them in the sales process
- What makes them feel recognized and rewarded
... could lead to some unhappy, unintended consequences.
In summary: Team-based sales incentives could be a good, even critical addition to your sales compensation plan - but should be pursued only after taking a close look at not only the sales process itself but also the skills, attributes and preferences of your sales talent.
Ann Bares is the Editor of Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time. Follow her on Twitter at @annbares.
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