The Gamble: Do You Have The Bonus Balls?

A fair, equitable and realistic bonus compensation mechanic can provide the perfect platform to increase your company’s commercial team’s productivity, help build your brand and ultimately increase your profits. So why are so many companies currently reluctant to opt in, to pay out?

Let’s be clear, great sales people, the ones that add untold value to your brand expect to earn associated performance related bonus and compensation. I wouldn’t infer that earning ‘bonus’ is indispensable to all salespeople as that’s not the case and I absolutely accept and understand that there are organisations unable to reward commercial people due to the potential risk targeted behavioural change can present. But I would suggest, and even endorse, that enabling commercial professionals to ‘feasibly’ earn additional income in return for delivering enhanced results provides a genuine stimulus for performance change. And that providing the infrastructure and mechanic to enable reward for positive change, is a wise investment indeed.

I say this largely because I engage with great commercial talent almost every day. Either I contact them or they reach out to me. If outstanding, I meet them, we have coffee or we have a beer. Sometimes more than one! But Importantly I listen. I mean really listen to and try to understand why we are now talking. Commercial professionals engage with me for a myriad of reasons of course but the crux tends to be that they are now open to rolling the dice on a new employer. With sales & business development professionals specifically, one core reason for this mind-set consistently still comes to the fore more than most: Bonus/commission issues and On target earning potential.

Or to summarise some very real and consistent recent candidate feedback from some very talented sales professionals ref their bonus;

‘I now can’t achieve bonus qualifying criteria or meet/exceed revised performance targets or budgets or They have now capped earnings irrespective of performance delivery or they have changed structure design, it’s not what I signed up or joined the business to participate in…. etc etc’

Some candidates have legitimate points for consideration around their individual circumstances and we chat these through, after in depth qualification however, some can cry me a river. But the overarching message from those experiencing recent structural change to bonus is pretty clear. If you manage or direct a commercial asset; someone you have invested in, developed, nurtured, and he or she is a now the key interface with your customers. Mess with, or mess up their bonus structure and your breaking that person’s trust and as a result their emotional contract. You’re gambling and rolling the dice on whether that person will soon leave your business.

As with most ailments prevention is more effective that cure. Choosing to invest in a fit for purpose performance reward structure which is both equitable and guaranteed to deliver tangible return for exceptional performance, drives positive commercial behaviours, enables performance change and positively impacts employee engagement.

Effective Bonus structures should by design be:

· Clear and uncomplicated

· Single factor or multi-factor depending on business goals

· Multi-layered – to reward both the individual and/or the team when applicable

No, these are not always so easy to construct. I understand this from extensive personal experience of building fairly complex bonus mechanics for regionalised cross functional UK sales and service teams. But attention to detail can be rewarded handsomely. Focused, driven and highly motivated individuals make a measurable impact on your customers’ experience, your internal productivity, functional attrition, turnover and profitability. In fact, it can drive almost every aspect of your bottom line business performance.

So why are so many sales functions presently playing the lottery and looking to squeeze, restrict or even marginalise their primary revenue generators earning potential today?

Well this is of course is the million-dollar question. Post Brexit every business has its operating costs and margins to protect after all. But consider this, if you’re considering or have recently reduced/restricted your people’s bonus earning potential, even by a perceived ‘nominal’ amount. Yes, you might save a little. Short term business performance might even remain broadly the same whilst you reduce spend. But this initial saving is probably nothing compared to the long term opportunity cost attached to losing a key revenue generator. Lose more than one of those and, size depending, the damage can become irrecoverable and in some instances even terminal.

My advice for what’s it’s worth, is do the maths and advantage play! Read your cards carefully and consider fully the potential impact of limiting your businesses bonus and compensation structure. If you have the bonus balls in place you can avoid playing the lottery with your sales team and focus on investing positively in their performance and engagement. If you do, the chances are your best people will continue to invest in you.

Our latest blog post

Contact Us

• E. info@incubateconsulting.co.uk
• T. 0141 266 0107