What Incentives Can Mean For Your Sales Staff

According to a white paper from BI Worldwide, money used as an incentive yields positive results up to a point. However, when money is not the optimal reward to get extra effort from people, when considering financial efficiency, ROI, or total results, there are superior alternatives to cash for incentives.

When sales reps are offered cash incentives, says the report, they perform at a lower level; When offered non-cash prizes, they perform at a higher level. In nearly every case when measuring a motivator meant to improve performance, non-cash outperforms cash all the time, says the report.

When their team needs to meet an ambitious sales goal, managers frequently turn to incentive programs. These programs are a well-established method of motivating employees to perform at higher levels, with similar success. Most sales managers admit that designing the perfect bonus and incentive system is no walk in the park.

How do we develop incentive systems that motivate and reward employees to maximize results? Review this white paper from BI Worldwide to learn more.

Knowledge @ Bi: Motivation At Work, by Jan Ketil Arnulf.

“Of course, we are motivated by money. However, what else are we motivated by?,.. challenges, says the paper.

The market is full to the brim of theories, recipes and consultants that help leaders motivate their employees. The simple answer is, of course, money.

Theories of performance-related pay and bonus systems therefore have a sizable share of the motivational market. There is, however, controversy about the impact and importance of such systems for performance in organizations. How far can we get with performance-related pay, can it have harmful side effects, and are there alternatives?

The magazine “Economist" revealed that while workers at the start of the industrial revolution worked in inhumane conditions, they still had it better than in slave-like conditions in the countryside. That is why they came.

In countries such as China and India, people continue to flow from hopelessness to marginally improved conditions because of paid employment. They go from poorer to richer regions, from lower to higher education and from dying to thriving industries.

The prospect of better wages drives a large global migration and motivates young people around the world to fill schools of all types in hopes of a more prosperous future. With such a powerful motivator as money available, maybe managers should not need anything else. Why is it not enough to portion out money in a sufficiently clever way to achieve competitive motivation?

In a mature market, work of the same value will receive the same pay. The employer cannot pay for better motivation; this only leads to lower profitability. He also cannot, to any large extent, withhold money until the results are available (performance pay), because employees can go to more reliable payers.

This is where psychology takes over as an explanation. The question of “money, and what else" is quite literal. When the most powerful motivators for people's behavior lose their power because everyone has them, it becomes necessary to find other ways to increase the stakes.

For the most financially interested, there is again some leeway in trying to tweak salaries. In some places that works, but the main reason why leaders should take an interest in psychology is quoted as: “Will the employees' brains be able to respond as desired to the different forms of payment?”

In 2000, the psychologist Daniel Kahneman received the Nobel Prize for having demonstrated exactly this: The human brain can be influenced by money, but we have no precise sensory organ for the most intricate calculations.

We work for money, but for many other things too, such as the feeling of self-respect, camaraderie, sense of achievement and purpose. It is the interest in this side of human beings that provides increased value in a developed economy. Therefore, it is profitable for managers to be concerned with motivational psychology.

The issue of money as motivation is, at its core, neither political, nor psychological. Logic, statistical sense will get you far.

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This article is published in Fudan Business Knowledge, September 2014, a digital magazine published by the Fudan University School of Management.