A Tale of the Stick and Invisible Carrot

Xactly Media
Xactly Media
In Objectives
The Xactly Media team closely follows the latest trends in Sales, Finance and Incentive Compensation Management to bring you newsworthy perspectives and actionable insights to drive your business success.

As the proverbial carrot-and-stick model suggests, certain targets motivate people. Unfortunately for many employees, that target (or carrot) is often times invisible. They are working towards some arbitrary goal that is unclear – both in terms of the needed action to retrieve it, and the actual prize itself. How many of you have had that same experience with something such as an end of the year bonus? It’s one of those urban legends everyone talks about that may or may not happen. The amount may or may not be what you expected. And you may or may not be sure what exactly you did to impact that amount. Pretty motivating, huh?

With this cloudy system often being the norm in businesses, its no wonder employee engagement is hitting an all time low. In a recent SearchFinancialManagement article, industry leaders and influencers from Deloitte Consulting, Forrester Research and Nucleus Research weighed in on performance management and how new systems will need to “involve recurrent coaching by managers and more repeated measuring of progress on specific goals and business outcomes.”

As Deloitte Consulting’s Erica Volini added, “Engagement is the word for 2016. We are going to transition from a system of record to a system of engagement.” We couldn’t agree more.

Employees often times have no understanding of their goals or how they are mapping to them throughout the review cycle. And managers often subjectively reward compensation, as there are no set numeric parameters in place. This limits the ROI the company is truly getting from variable pay programs and misses the opportunity to truly engage and inspire the employee. It’s paramount to offering a stick with an invisible carrot.

As we know, variable compensation has long been a proven lever in sales organizations to align rep behavior with corporate objectives and inspire better performance. We built our business on bringing transparency to this process and helping sales professionals visualize the “carrot” so they can reach their goals; and in tandem the company’s goals. We also realized that this same process could be applied to any discipline, releasing the industry’s first Management by Objectives (MBO) solution – Xactly Objectives – built on a proven incentive compensation platform.

For managers, Xactly Objectives allows them to easily set and track employee’s performance objectives, weighting each one based on the importance to the company’s overall strategy. Through personalized dashboards, employees are able to easily track those objectives and how they are mapping to goal in real-time. IE, offering a stick with a real, tangible carrot.

With the war on talent growing fiercer by the moment, companies can no longer afford a lack of visibility in their performance systems. Employees need – and deserve – to understand what their goals are and how they can achieve them. Not only will it help employee engagement, it will help your bottom line too. So come on, let employees have their “carrot” and eat it too.


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A Tale of the Stick and Invisible Carrot

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