From Prada to Primark: The Pain of an Underpaid Bonus

Blog
Feb 09, 2016
2 min read

If you’ve worked in sales, you’ll know that feeling in the pit of your stomach when you don’t get the commission you were expecting. Suddenly dreams of living the high life evaporate. Your daily Starbucks is replaced by a flask of coffee from home; steaks become burgers; and your Lamborghini morphs into the shared family car. It’s no wonder that getting less than expected leaves salespeople feeling blue.

This is a particular problem for the younger workforce. Millennials have different expectations about their commission, and look to be rewarded regularly. Younger employees relish quarterly or even monthly targets and the corresponding bonuses, driving the growing gamification of work. But that expectation can lead to disappointment when commission, and the reality of a sales role, doesn’t add up.

Earning less than you think you deserve has an obvious negative impact on motivation for a sales executive, which can damage productivity and ultimately revenues. But a poorly run incentive scheme can also have further reaching consequences for a company’s reputation.

At Xactly we’ve observed companies’ ratings on Glassdoor that are adversely affected by bad experiences of compensation schemes. Past employee reviews frequently refer to poor commission, and ineffective incentive schemes which lead to  low ratings scores for the company.

Negative feedback doesn’t only damage a company’s reputation; it can seriously hinder efforts to recruit the best new candidates in an already challenging job market. In the age of the Internet, job-hunters will do thorough research on companies, and use that to inform their choice. Reviews on Glassdoor could make a difference for a company pitching to recruit a prospective star performing salesperson. So, how can companies tackle their compensation shortcomings and increase their appeal to a discerning millennial workforce?

Implement an Effective Employee Incentive Scheme

Using Excel to manage incentive schemes is still a widespread practice, but can lead to bonus calculation errors of around 3–8%. Using an automated and visible incentive compensation platform updated in real time both eliminates these errors and gives employees a clear view of how they are performing against their targets. Ultimately, this helps sales teams to stop focusing on their own calculations and keep closing those deals.

Stay Competitive Against Peers

Businesses need to ensure their salaries and bonus schemes are competitive by benchmarking against their competitors. Using Xactly Insights, companies can compare their rewards against others in their sector, geography, size etc. By paying competitively, managers can avoid missing out on the best talent, as well as being panned on Glassdoor.

Remember That it’s Not Just About the Money

Ultimately, an effective bonus scheme isn’t achieved by throwing money at the issue. Companies can gain loyalty from employees by offering perks and benefits, and building a thriving culture that rewards top performance. Employees want to feel they’re being paid fairly for the work they do. Getting good rewards for great work keeps the workforce motivated and happy, whether that means an extra meal out each month or a yellow Porsche 9/11.

  • Incentive Compensation
Author
Karrie Lucero
Karrie Lucero
,
Content Marketing Manager

Karrie Lucero is a Content Marketing Manager at Xactly. She earned marketing and journalism degrees from New Mexico State University and has experience in SEO, social media and inbound marketing.