by Paul Hebert, Tim Houlihan and Kurt Nelson | September 11, 2019

Incentives are universal. Governments create policies that include incentives to drive citizens to adopt desirable behaviors. Businesses use them in bonus plans to help their employees focus. Parents use them to engage children in household chores or for better grades at school. Humans even use them to train animals to do tricks. 

Incentives are everywhere because they are effective -- that is, if they are designed and implemented properly. And that's a pretty big "if." While the idea of an incentive is both compelling in its simplicity and attractive for the results it can bring, an incentive is terribly easy to foul up. 

An incentive is a combination of two critical elements: the reward and the rules. The reward is the thing -- experience, money, status -- that is considered the central motivator. The rules are the way to earn the reward, and must be adhered to in order to get the thing that is so desirable. A proper incentive needs to include both of these elements, because a sales incentive of $1 million is meaningful only when it is attached to the mechanism to earn.

For an incentive program to succeed, these elements must be developed and deployed successfully. And creating an effective sales incentive will not create the sales results you need if you don't learn how to avoid the common mistakes that leaders make in the overall strategic goals and day-to-day execution of their programs. 

The seven common mistakes of an incentive program are:
  1. Rewarding top performers only;
  2. Spreading goals evenly among each rep, making them "one size fits all";
  3. Using most of the budget for a single, grand award;
  4. Requiring participants to be above quota to earn a reward;
  5. Lacking transparency;
  6. Keeping low performers out of the program, and
  7. Adopting an "it's all about the Benjamins" approach, placing cash at the center of the reward scheme.

Each of these "deadly sins" of incentives often comes from a positive place. But while such a mistake may be rooted in an understandable motivation, the goal could be accomplished more effectively using a different method. For example, in the case of the first sin, where top performers are the main beneficiaries of the sales incentives, the program manager probably thinks something along the lines of, "I want to make sure the best person on the team gets a great reward." But the fact is, a well-designed incentive program has the potential to motivate every member of your team in ways large and small. Every member of the team can grow, so why leave results on the table?