Creative Group brought together three behavioral experts to discuss common mistakes leaders make when it comes to incentive program design. We’ll unpack a new “sin” every other week. Follow along to see if you are committing any of these transgressions.
Sin 4: You must be above quota to earn a reward
Your Inclination: No one on my team is going to earn unless they’re hitting quota. I don’t reward slackers.
The Argument Against It: Gates act as ways to keep people out, not as motivators.
“What’s the point of rewarding people who aren’t above quota?” It’s a common question for sales managers to ask themselves. The trouble is, in most firms, only 58% of reps achieve quota.
This line of thinking is sinful because its primary objectives are about signaling and not about actual motivation. Using quota as a gate or qualifier to earn in an incentive program signals the sales force that under-performing reps are unworthy. And, in equal fashion, it signals to senior leaders that below-quota performance is judged harshly. Both of these reasons have more to do with turf and politics than about actually motivating the reps to achieve at higher levels.
It’s worth noting that any rule that creates a gate or qualifier will exclude a portion of the sales force. Reducing the number of people who can earn will necessarily reduce the potential results of your program. Much like a rule that stipulates only the top 20% can earn or one that requires a particular mix of products, gates and qualifiers engage only those reps (a) already within the gates and (b) slightly outside the gate. The rest of them feel doomed and disengage.
For those inside the gate, there are no motivational assets gained from such a qualifier. If the reps are already managing to be above-quota regularly, why try harder this incentive? The gate means nothing to them. Top performers are in the same boat: there is no additional motivation to require above-quota performance when they’re already there. This can lead to a level of slacking off that can actually reduce results.
For those slightly outside the gate (slightly below quota or close to the mix required to earn), there is likely to be some motivational pixie dust to get inside the gate. However, much of that motivation relies on perceived achievability.
And for those reps who are not within reach – or do not see a path to qualifying – there is only despair. If they cannot see themselves achieving quota, why go after the incentive at all? These reps will shut down, leaving potential results on the table, when they could be coached and supported in ways to get them closer to quota.
For the discussion about motivation, it’s important to return to Risk Compensation. Reps will not waste energy and effort on trying to achieve something that they don’t perceive as attainable. A qualifier makes it clearer and easier to withdraw if the reps believe the qualifier is too far out of reach.
Central to this sin is also the Survivorship Bias. Survivorship Bias occurs when we focus on the people or things that “survived” some process and overlook the ones that didn’t make it. The vast majority of sales managers were once successful sales reps and overcame great hurdles to get to where they are. These sales managers are prime candidates for the survivorship bias. In looking back, it’s easy to have fond memories of contests they won (the survivors), regardless of how the non-winners (the non-survivors) were treated.
Lastly, in research conducted by George Loewenstein on more than 9 million marathon runners, when physical ability has a normal distribution curve, there is only a small percentage of elite runners that make it to the top. Setting up a rule that excludes a large portion of the reps is merely that: exclusionary.
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