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

A Recruiter of Oscar-Winning Talent Talks 5 Ways You, Too, Can Build a 'Dream Team'

What were top artistic talents from films like 'Titanic,' 'Jurassic World' and 'Avatar' looking for in a new job?

In 1999, I left my job as creative director at Universal Studios in Orlando, Florida, determined to start my own themed entertainment company. Fast-forward 16 years, and what began as a small start-up design firm has transformed into Falcon’s Creative Group, an internationally recognized creative agency with a portfolio of completed projects for theme-park giants such as SeaWorld Parks and Entertainment, Universal Studios, Walt Disney Imagineering and more.

In 16 years, I have learned a lot about what it takes to run a successful company, but the most important lesson has been that success is impossible without a solid team backing you. This lesson has transformed the type of employees I recruit and led to my company's solid success.

Along the way, we've been fortunate to welcome to our in-house media agency, Falcon's Digital Media, a team of top industry talent. The team includes the Oscar-winning digital effects and VFX supervisor and producer for Titanic, Interview with A Vampire and Avatar;  the co-visual effects supervisor for Jurassic World; and the 3D artist for X-Men: The Last Stand. 

Here are five ways you can build your dream team, too.

1. Be genuine about your passion.

Hands-down, the most effective way to recruit people who are at the top of their game (whatever that game may be) is to show them how genuinely passionate you are about your company. What ultimately convinced our vice president of digital media and Lucasfilm alumnus, Tony Plett, to join us was a simple conversation about our shared passion for producing content that inspires viewers and transcends traditional filmmaking.

Plett says that that's a conversation that has stuck with him. And that proves that sincerity goes a long way with prospective employees -- especially those who are already accomplished visionaries in their respective field.

2. Connect with candidates on a personal level.

During the recruiting process for our animation director, Kirk Cadrette, whose past work has included iconic films like Braveheart and Independence Day, the two of us bonded over our shared love of surfing. Surfing!

Obviously, other factors influenced Kirk’s decision to join our team, but there is no doubt in my mind that establishing a common bond from the start helped convince him that Falcon’s Creative Group was an organization that cares deeply about our team members and their lives beyond the office.

3. Offer something they can’t get where they are (even if that's a billion-dollar company).

While monetary compensation is important to the recruiting process, it isn’t everything. If you truly want to recruit top-tier employees, find out what other elements of a job matter to them. Will they have free range on projects that would normally have restrictions at other companies?

Will they be able to spearhead a unique project that is a first for their career? Whatever it is that you can give them that is truly unique to your organization, make that point abundantly clear during the recruiting process.

4. Establish early that they will be change-makers in your organization.

Next, just let them be. When you are staffing your company with the crème de la crème of industry talent, make a conscious effort to tell prospects exactly how valuable they will be to your organization. More importantly, when they do make the choice to join your team, let them be the change-makers you promised they could be.

This means actively listening to their suggestions and feedback, allowing them the time to innovate and not fighting back against constructive criticism.

An example that stands out as a testament to this strategy is my early conversations with our compositing supervisor, Claudio Gonzalez. Claudio’s film work includes monster blockbusters like Transformers: Dark Side of the Moon and Thor; so one of my goals during the recruiting process was to let him know he would have the opportunity to apply his experience with these films to his position at our company in a way that would truly impact the way we operate and produce media.

My receptiveness to his ideas, both then and now, not only convinced him to join my firm, but has significantly improved the creativity and quality of our work.

5. Understand that their background may make them more knowledgeable than you and that that's okay.

This is an important point, because it can be difficult for entrepreneurs to relinquish some aspect of control when it comes to the organization they built from the ground up.

What is necessary to remember, however, is that your new recruits are bringing a knowledge-set with them that likely predates your organization. Therefore, you should embrace the fact that they may have a background in something you do not have. When you start thinking of new employees as true assets to the growth of your company, you will be amazed at the amount of talent you can attract.

Recruiting the best and brightest in your industry, then, is not a tactic reserved for the heavy-hitters. As an entrepreneur, you have plenty of opportunities to attract the movers and shakers, and I guarantee that you will better your business as a result.

Credit: Entrepreneur.com