Employee Sales Bonuses

I like to offer my employees $ bonuses for their sales. Right now I have generous weekly bonuses for x $ amount of net sales for each individual rep. I also have a spinning wheel that I bought off ebaY over the summer that has $5,10 & 20's tacked on to it with some blank spaces in between. They spin the wheel on each deal they write for some quick cash and it's been a lot of fun. Some spin that sucker 4 or 5 times per day!

I'm thinking about splitting the guys and gal into two teams (I have 6 reps right now) and having a competition between the two. Perhaps running it for the month with each person on the team needing to qualify with a minimum avg. $ amount each week based on 4 weeks. If one person on the team does not qualify, this would disqualify their entire team.

Looking for some ideas from you guys on fun and productive bonus ideas...

What works and what's too much that would make my reps rely on or come to expect things on a regular basis. I don't want to bury myself either.

Anyone?

Quote:

Originally Posted by bluenote

Looking for some ideas from you guys on fun and productive bonus ideas...

What about taking the winning team out to lunch/dinner or some event?

The wheel is a fun idea. Does the wheel have prizes and cash or just cash? For your team competition you could put bigger prizes [spa, dinner, theatre....] and bigger cash amounts.

Houston,

Outside of the office, I do not have any type of social relationship with my employees. It's best that way for may reasons.

Sending them to dinner w/ tickets to an event is a good idea though.

Gilbert, The wheel has been a lot of fun. It has a few blank spaces on it and the wins are all cash.

It's not a whole lot of lute and nothing in comparison to their paychecks... but none the less, it's some quick cash for writing a deal and it buys them nice lunches and whatever else throughout the week.

Thanks for the suggestions guys!

You didn't describe the office completely: are there non-sales types assisting your SRs to be successful?

If so, I highly recommend $50.00 gift certificates handed-out in front of the team when someone is "over-the-top" in their support efforts. One of the ISRs got the bulk of these simply because she was frequently responsible for a large chunk of the $55K in monthly GP on which her SR was commissioned. I had given the gift certificates to the Admin Mgr as well as the character who took care of mfr's rebates (in our business, that might represent our GP).

Suppliers are always good to work with for spiffing the SRs and there was usually a way to find a TV or peripheral for performance in a focused area of the business.

Hope this helps ...

Good luck & Good selling!
Pat

Quote:

Originally Posted by bluenote

Outside of the office, I do not have any type of social relationship with my employees.

In my experience you change this and your sales will go up by some 30%.

Without this factor your sales folks know that you regard them as a means to making you rich even at their expense. You demonstrate to them that they're expendable.

In my experience, every business problem starts out as a personal problem. Salespeople underperform because of trouble at home. Wife ran away with the milkman or husband caught red-handed in the local brothel.

And to help them to eliminate these problems, thus helping them to perform better, we have to get to know them as human beings not merely as employees.

Also, instead of creating two teams and making them compete with each other, I would create one cohesive team and make it compete against its own previous best.

And to make sure that it's a real team not merely a group of individuals sharing an office, a toilet and coffee machine, I would remove individual compensation and reward the team as a unit.

Human behavior expert Alfie Kohn has published numerous works decrying reward systems. His writings include "Why Incentive Plans Cannot Work," Harvard Business Review, September-October 1993, and "For Best Results, Forget the Bonus," The New York Times, Oct. 17, 1993.

He is also the author of "No Contest: The Case Against Competition" (Houghton Mifflin, 1992), and "Punished By Rewards: The Trouble with Gold Stars, Incentive Plans, A's, Praise, and Other Bribes" (Houghton Mifflin, 1993). See www.alfiekohn.org for more information.

The essence is that when you remove the pressure of internal competition, then people perform a lot better. As a difference, I regard external competition as a challenge but not pressure.

Thoughts?

BD

The fundamental concept behind compensation is "reward for performance". When you do this for the team, you risk alienating the real sales super stars. AND, as long as there is competition out there, those super stars will want to earn top dollar ... they will break and run at the first offer from the competitor with a comp plan which will generate more commission for their individual efforts!

By definition, team compensation rewards mediocrity: "socialized comp". By providing an inflated share to an under-performer, the motivational aspect of commission is lost. Consequently, the management role becomes one of babysitting the comp plan every month when the numbers come-in.

The beauty of a truly focused comp plan is that it rewards the performance which is tied to company's current objectives. It must be UNcapped. The over-performers must be regaled as if they were gladiators!

The real thoroughbreds on the team thrive on their monthly commission cheques. The "tier-2" SRs aspire to earn meaningful commissions. In my Xerox days, the big winners were driving Vettes and Bimmers: everyone else wanted "into President's Club".

It doesn't take an accountant to tell you that team compensation is not designed to optimize the individual's income. Accordingly, I would counsel those SRs who aspire to greatness that you judge a job offer by the magnitude of the role presented: all-in, what's in it for you (and your family)?

Once again, I do NOT read such business publications. The quotes provided are infuriating: "Why Incentive Plans Cannot Work"! You need to remember that these outrageous statements are made in order to sell their books: After all, how many companies out there have proven that the motivational side of commission has been at the root of their success! "Cannot Work" ... they HAVE worked and ARE working!!!

In my experience team compensation is something to be avoided at all costs. In my years of sales management and now in my consulting practice, I would NEVER suggest implementing such a plan.

Good luck & Good selling!
Pat

Blue Note, you said, "Outside of the office, I do not have any type of social relationship with my employees. It's best that way ... Sending them to dinner w/ tickets to an event is a good idea though."

My experience tells me that it is better to keep some distance. I've had the team out for functions (dinners, theatre, etc.) but it gets unwieldy and tends to lose the personal touch. This especially if the budget doesn't permit inviting the "significant others".

Consequently, I much prefer giving AMEX chits for dinner, theatre (etc.) or hockey/baseball tickets.

After all, there is NOTHING more motivational (in both directions) as the spousal unit. I've learned that it's critical to keep them involved at all costs. One example, around mid-year, I would send out tourist brochures for that year's President Club location to each of the spousal units. A personalized note would be included which explains club to them. Then, in the 3rd quarter, I would send out to the spousal units, another spiffy enticement. Monthly through the 4th quarter, more would go out each with new information on what to expect at President's Club. This always had the desired effect.

Good luck & Good Selling!
Pat

OUTSource Sales,

We just have different approaches. You go for superstar individuals. I go for a superstar team.

A superstar team doesn't need superstar performers. And a group of superstar performers don't automatically make a superstar team.

Why?

The members of a superstar team wake up in the morning looking forward to contributing to something bigger than they could pull off individually.

Many superstar performers wake up in the morning only because they get paid for it.

In the team's case it's the passion, enthusiasm, energy and drive to create something amazing.

In the superstar's case it's another day, another buck. If they pay me, I do it.

> By providing an inflated share to an under-performer, the motivational aspect of commission is lost.

But why the cricket would I hire someone who is solely motivated by money?

I may look at it from the wrong angle, but to me a steady, loyal plodder is more valuable than a whimsical uncontrollable superstar who gives me the attitude and threatens to quit every week.

Given the right help and support, the plodder will improve, but the superstar is a disaster as is.

So, what can I do with the plodder? Assess his natural talents and play him to those talents.

BD

First off, Bald Dog, there are no "wrongs", so, you and I are throwing about views based upon our personal experiences in sales/sales management.

With that said, you assume too much: having "superstar performers" (your term) on the team makes for a true sales environment in which some lead and others follow. There are no negatives (for example) to have two SRs blowing away plan and two SRs making plan (with some peak months).

I had no under-performers on my team.

The next massive disconnect wrt "superstar performers" relates to your perception of them as being, "whimsical uncontrollable superstar who gives me the attitude and threatens to quit every week." I have NEVER had such an experience either as a peer SR on the team or SM leading the team.

Nextly, you sent me reeling with your comment, "But why the cricket would I hire someone who is solely motivated by money?" The sales compensation plan is designed to motivate against the company's objectives (units, margin, share, growth, etc.). If a SR earns commission against those criteria, how can there be an issue? I managed senior individuals with sufficient personal depth to see their earning potential in the right perspective. In each instance they were consistently strong contributors to the team at large.

The role of the SM is to ensure that the atmosphere is one in which every single member is superbly positioned to achieve their personal goals. During sales meetings, the team would be asked about their wish-list in terms of training beyond sales skills. After a skills inventory and personal assessments (based on time together), perhaps, training was required to bring-up the business or sales skills. Or, perhaps, sessions with management to gain a keener insight into how the company ticks.

In my view as SM, it was my mission to both:
1. bring the sales leaders to another level (eg. teach them how to "earn more net without selling more gross"); and,
2. bring the entire team to a higher level of productivity;

I can say, in all honesty, that I managed the team by knowing the individuals. No one on any of my teams would say that they were either coddled or ignored!

Good luck & Good Selling!
Pat

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