Why Your Incentive Programs Fail and the Secret to Incentive Success

During a leadership program I was facilitating in Milan, Italy, we were talking about how managers try to motivate people through the use of bonuses or incentives. The frustration quickly rose to a head in the room, as the managers shared how much they struggle with finding a way to continually motivate each person on their team to perform, and perform consistently, especially in the face of change or difficult times.

I asked this team of managers, who all admitted at one time or another to designing an incentive program for their team, “Have these programs or bonuses you’ve offered achieved the results you want?” There was a general consensus that the bonus programs they’ve put in place don’t work.

“Why?” I inquired.

One manager stepped in by explaining, “Well, Keith, in the past, when I’ve designed a bonus program for the team, I would typically position it so that the top salesperson for the quarter or for the month would get some sort of additional monetary compensation.”

My follow up question, “And how has that been working for you?”

“You can probably guess what happens. The top performer always wins.”

I reaffirmed, “So basically, managers, with good intentions, put together some type of bonus structure in place where the top person wins something, typically some amount of money.”

How Managers Set Their Team Up for Failure

“Now, envision this. You have your top performer or A player lined up at the starting line next to your average or B player. And next to them is your underperformer or your C player.

Then the starting gun goes off. What happens to the C player? What do they do?”

One manager jumped in and said, “The C player looks at the A player and the B player next to them and thinks, I’m not going to even try because I don’t have a chance. So, they check out immediately.”

The very incentive or bonus you put together with the intention to motivate the entire team has now become a dis-incentive for your lower performers!

Now, the B player looks at the A player and thinks, “Okay, I have a chance here. I’m going to give this a shot and do my best.”

However, at some point during the race, they see the vast lead the A player has, so just like the C player, the B player now checks out and gives up. So who wins?

“The A player. The one who always wins.” The managers nodded in consensus.

It’s evident to these managers that even with their good intentions, they very bonuses they set up are usually positioned for the A player to win, while the rest of the team looks at them feeling doomed to fail from the start.

The overarching question was apparent. One manager rose up and asked, “So what do we do to get everyone engaged and motivated? And to add to this, given our company policy and resources, we don’t always have the ability to keep offering our team additional money to perform.”

It was during this conversation when I was reminded of a story where in one particular company, the manager was going to give out a $5,000.00 (USD) bonus to the person who outperforms the rest of the team for that quarter.

Well, at the end of the quarter, to no surprise, this manager’s top performer won.

When the quarter ended and all the sales for that quarter were confirmed, the manager called the salesperson who won into her office. She handed a $5,000.00 check to this high performer and said, “Congratulations on winning. Here’s a check for $,5000,00. Well done! You deserve it.”

“Thanks,” the salesperson replied, but with a lack of enthusiasm or excitement around the substantial amount of money she just received. The manager was surprised by such a passive and unenthusiastic reaction.

Puzzled, she responded to this salesperson by saying, “I just handed you a check for $5,000.00 dollars. I would think you would be more excited! What did I miss here?”

And that’s when she heard the unexpected comment which shocked this manager into a new way of thinking. The salesperson looked at her manager and said, “To be completely honest, I’d hand this check back to you right now and would feel more rewarded and motivated if you announced to everyone on our sales team that I am the best salesperson on the team.”

What a surprise! Her reaction totally blindsided this manager.

Now, for those managers listening to this story, some of you may be thinking, “Are you kidding me? I would take the money!” However, there are always people in the room who feel differently and would rather receive that kind of acknowledgment from their manager.

The reality is, most managers truly don’t know what inspires and motivates each individual person on their team to perform. Instead, they make two general assumptions. The first assumption is, “Salespeople are coin operated and only motivated by money.” Clearly, this story refuted that assumption.

The second assumption that managers make falls into the manager coaching in their own image. That is, “Well, I know what motivates me. So, I bet it’s going to be the same for the people on my team.”

Then, managers wonder why people aren’t responding positively to what you perceived would motivate them to push harder and perform better.

How to Inspire Each Individual on Your Team

Managers spend so much time anguishing over what the right bonus program would be to motivate their people. Well, if you’re struggling to come up with the answer, then chances are you’re asking the wrong person—you! Instead of trying to come up with what you perceive will motivate your people to better their best and go the proverbial extra mile, what if you let them design their own incentive? Keep in mind, it’s not always only about the money. And if you’re concerned that effective bonuses require some type of monetary compensation, consider these rewards that people would deeply appreciate and work harder for.

There are things people want that are not tangible. Refer back to the top performer in the story I shared. Here are just a handful of ideas of what might inspire your people to re-focus all their energy to maximize their performance.

• Time off.
• Mornings or afternoons where they can leave work early to pick up their children or drop them off at school/daycare.
• A Friday or two to go out and play a round of golf or spend time with their family or what they like to do during their down time.
• Lunch with their manager. (Yes, some of your people actually do want to spend time with you!)
• Authentic acknowledgement in private or in front of the team. (Don’t assume what they like or what makes them uncomfortable. Ask them how they like to be acknowledged!)
• Rewarding them with being able to manage a new or specific account.
• Providing them with a certain type of lead or client to manage.
• Giving them more time to craft their career trajectory and personal brand.
• Empowering them with more responsibility or making them a team lead. (Running team meetings, etc.)
• Getting additional administrative support for a certain period of time, dedicated to them and their needs.
• A gift certificate to their favorite store or restaurant.
• A company t-shirt, jacket, or hat. (Yes, people do go crazy for this stuff!)

Honor Them as Individuals Rather Than a Group

Notice that most of these incentives don’t cost you a dime. And more so, it’s what your people want most, aside from a monetary reward. But the only way you can assess what they want, rather than what you think they want, is by taking the time to sit down with each person and have a one to one conversation around what truly inspires them to come to work every day. Taking the time to uncover what makes them feel most fulfilled and satisfied, along with what would push them to go the extra mile becomes the impetus to peak performance, especially if they know that what they wanted most was waiting for them at the finish line.

A globally recognized authority on sales and leadership and the pioneer of executive sales coaching and management coach training, Keith Rosen is the CEO of Profit Builders, named one of the Best Sales Training and Coaching Company Worldwide. Over the last three decades, Keith has delivered his programs to hundreds of thousands of salespeople and managers in practically every industry; on five continents and in over 50 countries.Keith has written several best sellers on leadership, time management and sales, including, Own Your Day and the globally acclaimed Coaching Salespeople into Sales Champions, winner of Five International Best Book Awards and the #1 best-selling sales management coaching book on Amazon.com for six consecutive years. Find more resources at www.KeithRosen.com.