Don’t Fight the Gamers, Embrace Them
With the recent news around the value, repercussions, and effectiveness of ICM (Incentive Compensation Management) we thought we’d weigh in with our eleven years of experience in the space. An expertly written and executed sales incentive compensation plan will motivates reps, and drive desired behavior. However, when reps game a poorly written plan, the results can be a CFO’s nightmare.
Xactly’s CEO, Christopher Cabrera wrote an entire book about how reps “gaming” a well written plan really is a good thing. Pay careful attention to the phrase well-written. When a plan isn’t well-written, it’s important to be on the look out for rep behavior that can cost your company, including:
The Price-Slashing Rep: This salesperson takes advantage of earning their commissions from top-line sales revenue. They’ll dip far below market price to close as much business as possible- padding their own pockets while the company loses money.
The Slacker Rep: A rep with a monthly goal and achievement bonus boosts her earnings by selling hard one month, and spending the next month shopping on Amazon. This rep maximizes her earnings doing half the work she’s capable of doing. Her lack of productivity causes the company to miss out on potential gains.
The Bargain Bin Rep: An employee with a unit based incentive plan that does not prioritize products spends the quarter focusing on easy-to-move discounted products. The salesperson walks away flush, while the company takes a hit.
All of the above scenarios are win-lose. The rep profits, but the company loses money. Let’s be real, getting played is no fun. However, as upsetting as it might be to admit- only plans that aren’t written well can be gamed this way. When companies focus on their fear of incentives, instead of the motivational power of their incentive compensation, they short-change themselves, and their employees.
Incentive compensation used to refer only to the financial bonuses paid to sales people. Today, it spans a wide variety of non-monetary incentives as well, and includes everyone from janitors to bank tellers, truck drivers, and CEOs.
Don’t fight the gamers; embrace them, and build your incentive plans knowing that they will utilize every possible means to earn their badges, bonuses, checks, extra PTO days, or whatever other bait you are dangling in front of them. Just make sure you’re inspiring the right performance, and driving the behavior you want.
Ultimate Guide to Sales Compensation Planning
It’s that time of year again. It’s Q4, and you’ve begun the challenging process of designing next year's sales plan. We feel your pain and want you to get the most benefit possible from your sales planning process. Download the guide today to make your upcoming sales comp plan your best yet!