The Wells Fargo Lesson? You Need Smart Incentives to Motivate Your Team.

Strict incentives may cause unethical actions. Lenient ones don't push hard enough. Find a balance.

It’s clear that strong incentive programs are important to the success of any employee team, sales or otherwise. Research shows that:

•  Incentive programs improve performance by an average of 22 percent.

•  33 percent of all sales can be attributed to incentive programs.

•  More than half of all U.S. organizations use at least one type of employee incentive program.

However, it’s important not to push all of this too far, lest you end up facing the perils resulting from overambitious sales quotas. Nor do you have to look very far to find a great case study illustrating them.

The Wells Fargo sales quota debacle

This past September, Wells Fargo executives sat before the U.S. Senate Banking Committee describing the unethical sales practices that led them to open thousands of fraudulent accounts, fire more than 5,000 employees and pay a fine of $190 million.

According to the bank, many of these accounts were opened due to strict sales quotas that were incredibly difficult for employees to hit without resorting to shady practices. In the wake of this scandal, those sales goals have been eliminated in order to better serve customers and provide salespeople a more sustainable working environment.

The lesson to be learned here is clear: Sales quotas and incentives have a direct, important impact on the way your team members perform their jobs. If your incentives are too strict, you risk forcing employees to act unethically. If they’re not strong enough, on the other hand, employees won’t have a reason to go out and do the very best they can.

The key lies with striking a balance. Here are four things you can do to ensure that your company is offering the right kinds of sales incentives.

1. Use competition instead of quotas.

Tracking one single metric, such as total sales or outbound calls, doesn’t take the whole scenario into account. You need to figure out a way to weigh all valuable sales activities and add them together to get a true picture of how effective a salesperson is.

Once you have this formula, it’s time to gamify the system. In a report published by the Harvard Business Review, one company used a similar scoring system to create a fantasy football-based, team-style competition. This had a dramatic impact on performance, with noticeable increases in the number of outbound calls -- calls that led to appointments and visits to the company's retail location. As a result, inside sales referrals jumped an incredible 200 percent.

2. Make incentives quarterly instead of yearly.

For your low-performing employees, quarterly bonuses are actually a much stronger incentive than they are for your superstars. When such a bonus is removed and replaced with an annual one, the performance of those low-performers drops by an average 10 percent, while the average performance of stronger employees drops by much less.

The reason is simple: These employees need more frequent incentives to perform. Pace-setting incentives are important for people who aren’t able to motivate themselves and need a little boost to contribute effectively.

3. Create incentive tiers.

It’s important for sales incentives to be challenging but also achievable. Your sales team members need to be close enough to reach their goals, to feel the need to push themselves. But if those goals are too easy to hit, there’s no incentive to work harder.

The most effective way to handle this is by creating a variety of tiers, much like many rewards or loyalty programs. As employees perform better, they’ll earn better and more valuable incentives. The beauty of a tiered incentive program is that employees will always be close to their next incentive, no matter how they’re currently performing.

4. Explain the program clearly.

An incentive program, even if it’s based on a wide variety of metrics, must be simple to understand in order to be effective. If it isn’t easy to understand and measure, employees won’t know where they stand and what they need to do to reach their next incentive.

It’s critical that employees know exactly what contributes to their incentives and how they can improve. Don’t hide the metrics and calculate them in the background. Provide your employees with the exact formula for success. Whenever possible, give them access to updated information so they know where they stand at all times.

Your sales team is in charge of directly driving business for the organization. Finding the right way to incentivize its members has an enormous impact on the company’s bottom line and is a sales manager’s most important priority.

Certainly, it’s difficult to find the right balance between "too difficult" and "too achievable." But by following the advice outlined above, it's possible to develop a plan that works for any organization.

Written by: Danny Wong

Credit: Entrepreneur.com

The Best Ways to Reward Employees

Having an effective reward program in place can help solve many of your HR issues.

Every company needs a strategic reward system for employees that addresses these four areas: compensation, benefits, recognition and appreciation. The problem with reward systems in many businesses today is twofold: They're missing one or more of these elements (usually recognition and/or appreciation), and the elements that are addressed aren't properly aligned with the company's other corporate strategies.

A winning system should recognize and reward two types of employee activity-performance and behavior. Performance is the easiest to address because of the direct link between the initial goals you set for your employees and the final outcomes that result. For example, you could implement an incentive plan or recognize your top salespeople for attaining periodic goals.

Rewarding specific behaviors that made a difference to your company is more challenging than rewarding performance, but you can overcome that obstacle by asking, "What am I compensating my employees for?" and "What are the behaviors I want to reward?" For example, are you compensating employees for coming in as early as possible and staying late, or for coming up with new ideas on how to complete their work more efficiently and effectively? In other words, are you compensating someone for innovation or for the amount of time they're sitting at a desk? There's obviously a big difference between the two.

The first step, of course, is to identify the behaviors that are important to your company. Those activities might include enhancing customer relationships, fine-tuning critical processes or helping employees expand their managerial skills.

When business owners think of reward systems, they typically put compensation at the top of the list. There's nothing wrong with that, since few people are willing or able to work for free. But the right strategy should also include an incentive compensation plan that's directly linked to the goals of your company for that period. You might want to include some type of longer-term rewards for key individuals in your organization. Historically, this has often included some form of equity ownership.

Benefits are another type of reward in a strategic reward system, and your employees are definitely going to notice the types of benefits you provide. Companies that don't match or exceed the benefit levels of their competitors will have difficulty attracting and retaining top workers. This is one reason an increasing number of businesses are turning to professional employer organizations like Administaff to gain access to a broader array of company benefits.

However, you can't diminish the importance of recognition and appreciation as integral components of a winning strategic reward system. These two elements rarely receive the attention they deserve from business owners, which is amazing because they're the low-cost/high-return ingredients. Employees like to know whether they're doing good, bad or average, so it's important that you tell them.

Recognition means acknowledging someone before their peers for specific accomplishments achieved, actions taken or attitudes exemplified through their behavior. Appreciation, meanwhile, centers on expressing gratitude to someone for his or her actions. Showing appreciation to your employees by acknowledging excellent performance and the kind of behavior you want to encourage is best done through simple expressions and statements. For example, you might send a personal note or stop by the employee's desk to convey your appreciation. Another approach is to combine recognition and appreciation in the form of a public statement of thanks in front of the employee's co-workers or team, citing specific examples of what they've done that has positively impacted the organisation.

Now that you know what it should include, it's time to review your strategic reward system. Does it address compensation, benefits, recognition and appreciation? Is it aligned with your remaining business strategies? Is it driving the right behaviors for your company, as well as your performance goals? If it needs fixing, don't wait. It can mean the difference between your business' success and failure.

How Getting Fired Could Be the First Step Toward a Better You

Few things are more motivating than losing your job. Don't squander this opportunity to learn about yourself and embrace a new direction.

Getting fired can feel like rejection or the painful end of something. It certainly doesn’t feel good. It can cause you to go into protective mode and tell yourself a story that wasn't your fault. It also can lead you to beat yourself up for not meeting expectations.

People get fired for many reasons. Perhaps the business wasn’t doing well and needed to cut costs or restructure. Maybe your boss really was an idiot and the two of you didn't get along -- so you subtly self-sabotaged yourself. Or maybe the job wasn’t serving you. Think back. Did you find yourself wasting time because your heart wasn’t in it? Did you get complacent and flatline instead of looking for ways to challenge and motivate yourself? 

Whatever the situation, I guarantee you will be better off somewhere else in the long run.

Grieve. Then get moving.

Allow yourself to grieve for a short time. Then, stop feeling sorry for yourself and start to look on the bright side: You now have countless opportunities to consider.

Getting fired isn’t the end of the world. It isn't even the end of your career. If it was unexpected, odds are there's no predetermined path laid out for you. Take this opportunity to assess and regroup. What is it that you truly want to be doing? Are you satisfied in your current career, or do you need to pivot?

You might want to look into specialty training or further education. Or maybe you need time off to do some soul-searching. Whatever you decide, realize you now have many different paths from which to choose. More than one is bound to make your life more fulfilling than it was at the job you left behind. 

Success breeds complacency.

Oftentimes people who reach a certain level of success cease to strive for more. Their basic needs are met. You might linger for years in a job that's only mildly fulfilling you. If you're thinking, "It can't get much better than this," you're functioning but not really really thriving. 

Getting fired gives you a different perspective. Take a look at your life and your next moves with fresh eyes and a beginner's excitement. What else might you want out of a job that would make you passionately excited to get up every morning? You -- and your eventual employer -- deserve more than just complacency.

Failure is your best teacher.

Absolutely none of the world's most successful people took a straight, smooth, always-upward path. Taking risks and reaching for something more naturally means you will get turned down and endure rejection. In fact, stretching beyond your job description could be the reason you got fired from the position that didn't fit.

Failure isn’t an end, and it certainly doesn’t mean there’s anything wrong with you. Failure teaches resilience, empathy, and self-confidence. The experience is painful, but the lesson it teaches can be quite a gift. 

 “Failure is neutral -- it’s how you emotionally hold it inside of yourself that is not," says Ashley Stahl, a career coach to millennials. "In truth, failure is just feedback that it’s time for you to course-correct. Use failure as an opportunity to evaluate where you add the most value as a worker, and celebrate the fact that you’re not great at everything.”

Be honest with yourself so you can move forward.

So, what do you do now that you’ve been fired? You can look ahead by being honest about your past. Ask yourself the hard questions -- the ones whose answers might reveal you bear some responsibility.

What could you have done better? What part did you play in getting fired? Would you be happy at a different job in the same field, or might you actually want to do something else?

Look at the pros and cons of your last job.

What did you love? What did you hate? Did you like the culture, or do you need something different? Smaller, larger, more service-oriented?

As best you can, isolate the characteristics you most want in your next job. Otherwise, you risk falling into something that looks just OK. Real progress means you're moving closer to fulfillment, not just into another position that won't engage you on a deeper level.

Start making phone calls.

Call your friends, if you haven't already. Let them know you're looking for a job in your sector or primed for something new. Networking is your lifeline. Your friends, family members, and colleagues should know a skilled and employable rock star is available to join their team. Take all the introductions, advice, and sympathetic ears offered.  

Most important, remember you have it within you to bounce back -- with new self-knowledge that will help you become stronger than ever before.

Written By: Murray Newlands

Credit: Entrepreneur.com