Do Team Incentives Work?

When brainstorming sales incentives to motivate employees, team incentives usually pop up.  But typically the topic is followed by questions related to the effectiveness of these incentives.  Some stakeholders may question if team incentives drive desired behaviors and business outcomes.  During these discussions, some leaders state “yes – absolutely they work”, others argue “no – not at all” and then there are those in between.  Well, the answer depends on a few things.  But below are 3 that should be considered – culture, sales process and sales management.

CULTURE

If the sales team you want to apply a team incentive to currently encourages individual performance, or highlights and rewards certain individuals, then team incentives maybe challenging to implement.  If you build sales compensation plans to incentivize team behaviors but then publicly reward individual performance then you’re going against your own messaging.  You may generate a bit of confusion within your sales team.  For team sales incentives to work, there has to be a culture that encourages collaboration within the same role. 

SALES PROCESS

Plans generally start with the corporate objectives of a company, and the sales process and roles (or jobs) are designed in a way to encourage the achievement of those corporate objectives.  Generally speaking, comp plans should be linked as close as possible to a salesperson’s direct contribution.  However, if a role in your sales process requires teamwork, then a team incentive will make sense.  Keep in mind sales jobs, or roles, should always be well defined before building any sales compensation plan.  Notwithstanding even with well-defined roles it may be challenging to attribute how much influence 1 person has over the sale to give them individual quotas – this is where team incentives are a good option for that specific role.  You know the sales process will break if the role is removed, but you cannot assign a quota per person.  As an example, there maybe a role that is shared amongst the sales representatives.  This role could be a solutions engineer that partners with multiple sales representatives, or account executives.  They also collaborate with each other to design solutions for the prospect.  Possibly due to the stage of the company, the solutions engineer team is organized in a way to allow flexibility in assignment and collaboration within the team.  So as a company, you have determined this specific job, or role, is needed in the sales process and has customer influence, but cannot assign individual quotas at this point.

SALES MANAGEMENT

One of the biggest challenges with team incentives is paying for performance.  If there are people who work extra hard and help the team to go over quota then everyone on the team will reap the benefits – not just the top performers.  Even the ones who don’t put much effort in will receive the same sales incentive or commission as a top performer.  This is why its important to only use team incentive for a role that requires collaboration between team members and has accountability.  Meaning the sales compensation plan is not everything, there should be a direct manager that coaches their team members.  There should always be an annual performance review for each employee, even if their on a sales compensation plan.  If a role is a shared resource, then the leader should organize the team in a way that allows for a fair workload.

SUMMARY

In summary, before you add sales team incentives to plans, make sure you take a good look at the culture, sales process and sales management.  A team incentive is considered a pay element, or measure.  You are telling the sales employee “For you to earn your target incentive the team quota has to be met.”  Because the role requires collaboration between team members this will, by default, make sure everyone is playing a part.  Nevertheless, just as with any team assignment, there will be those who play their part but not as well as others in the team.  This is why its so key to have good sales management with team incentives, to ensure each person in the team is carrying a fair workload. 

Team incentives do work, but requires alignment to culture, sales process and good management.  A sales compensation plan with a team incentive where there is no partnership will result in hindered performance and a demotivated sales team.  For more information on how to design effective sales incentive plans check out our course here.  Or if you just would like general guidance on troubleshooting plans or plan effectiveness then you can take our plan effectiveness course here.