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Sales incentive plans proving hard to change

SALES STAFF

Sales incentive plans proving hard to change and costly to administer

Companies spend a vast amount of time and effort in designing their sales incentive plans, yet too often senior executives are unable to monitor progress against their plans or to evaluate their effectiveness, according to a US survey on managing sales incentive programmes.

The survey carried out jointly by Mercer Human Resource Consulting and Motiva, a provider of enterprise incentive management (EIM) software, catalogues a range of problems associated with current sales compensation plans. Many of the programmes were seen as unresponsive to changing business needs, and costly to administer.

"All of the problems point to the need for better, more flexible sales incentive administration," says Jeff Carr, president and CEO of Motiva. "Good administration is the key to aligning employee performance and corporate objectives, while keeping the cost of managing sales incentive programmes low."

Key survey findings

  • Reward philosophy: A third of the respondents said their company did not have a clearly-articulated reward philosophy.
  • Flexibility: Half the respondents said their incentive plans and processes did not allow management to quickly change plan design to respond to changing business needs. Only a third of respondents said their plans allowed such flexibility.
  • Administration: More than half the respondents believed there was an opportunity to reduce costs and increase efficiency in their company's sales incentive programme by streamlining administrative processes.
  • Accuracy: Only half the respondents felt their salespeople trusted the accuracy of the rewards they received. Overpayments in sales incentives are common, but because they often go unreported, they are difficult to track.

A final word

"Employers invest a great deal of effort in designing their sales incentive plans, often without putting the processes in place to support them. To ensure their plans continue to be effective, executives should articulate a meaningful sales incentive policy and make sure this is clearly communicated throughout the organisation." - Steven Grossman, leader of Mercer's sales effectiveness consulting practice in the US.

Want to know more?

Title: Managing Sales Compensation: Critical business issues and best practices, Mercer Human Resource Consulting and Motiva.

Methodology: The survey was conducted in summer 2002 with a group of sales, finance, and compensation managers recruited from 30 US companies with annual revenues of more than $250 million.

Availability: The survey report is available free of charge. To obtain your electronic copy, register at www.motiva.com/mercer/report/enter.asp?SEID=0-4073

To read a copy of the press release online visit . . .

www.mercerHR.com/pressrelease/details.jhtml?idContent=1064630

Motiva is a leading provider of enterprise incentive management (EIM) software, "enabling companies to create and manage flexible, highly targeted incentive programs that drive top-line and bottom-line results across the extended enterprise". Its headquarters are in Pleasanton, California.
www.motiva.com

Mercer Human Resource Consulting is a global firm that "helps organisations create business value through their people". It has more than 13,000 employees in some 40 countries and territories serving clients worldwide.
www.mercerHR.com

Posted 2 September 2002