For this week’s blog my colleague Colin Hodgson takes on the issue of why it is so important for organisations to make sure reward is always linked and to the right behaviours when it comes to deploying incentives to drive sales performance.
What role does reward play in driving the right behaviours in your organisation? And how interested should the HR team be in what the sales and marketing people get up to?
As a number of UK banks recently decided to ditch all sales-related reward for its frontline staff these are two questions I think we could all do with reflecting on.
For the banks, the move to do away with sales incentives came after realising that although extremely effective in delivering sales, new revenue was coming at the expense of what was right for the customer.
Banks may be the institutions in the limelight at the moment, but when I glance at other sectors – notably car insurance where referrals are inflicting huge costs on consumers – I am sure is only a matter of time before other organisations come unstuck for putting profit before customer interests.
Many organisations operate away from the glare of the mainstream media but I think there are two powerful reasons why the HR team in every business should look at whether reward and incentives are really achieving the right things.
The first reason is to assess whether the way you deploy reward and incentives in customer acquisition is really playing a role in supporting your business objectives.
If there is one thing that we learn from the banks, it is that chasing sales isn’t the only way to a profitable business. Of course we all need to find new customers but also we need to look after our existing ones, listen to them and put things right when things go wrong.
This may normally be the domain of a senior sales or marketing team executive but as HR practitioners we need to play a role in focusing on the right objectives which are in the long term interest of the business, taking the opportunity to look at long term outcomes from reward and incentives such as supporting and extending the customer lifecycle. This means ensuring our organisations place as much of a premium on things like great customer service as they do on new revenue from the sales team and channel partners. The influence here of HR is key.
Then there is also the issue of behaviour. A second lesson from the banks is that when deployed effectively, incentives and reward can have in incredibly powerful role in dictating how our people prioritise their work.
As many organisations will find their reputation in the market comes as much from the way their people behave as the products and services they deliver, this is another area where HR teams need to ensure incentives and reward aren’t driving behaviours which conflict with what is good for the customer.
It may be late in the day for the banks but they are now showing they have learnt these lessons – I am sure many other organisations who would benefit from following their lead. HR practitioners can and should take a lead in the debate.
Colin Hodgson is director of sales for incentives and motivation at Edenred – www.edenred.co.uk