Wondering about incentive compensation management and your business could benefit from it? This blog is the answer to both the above questions and many more related to incentive compensation. But before we get onto the benefits of adapting to incentive compensation in your business, let us get over the basics.
What is Incentive Compensation?
Since people react positively to incentives, incentive compensation is a type of compensation provided to a salesperson where their incentives are directly proportional to the 4. In addition to that, a sales person’s incentive also depends on the team’s success and the organization’s success altogether.
incentive compensation management is used to motivate employees in performing better by selling more products and services of the company.
What are the Different Types of Incentive Compensation Used in an Organization?
An employer can use bonuses, rewards, monetary remittance, recognition, and even awards as incentives for his or her employees. An employer will come up with an incentive compensation plan depending on his company’s aim and long-term goals.
How to Come Up With Incentive Compensation Management?
Strategizing incentive compensation management happens in four stages. Let’s get over them one by one.
Coming Up With a Plan
Before you start taking any action, you have to come up with a plan before the time of implantation. It is best if you could strategize a plan well before implementation, i.e. two to three months before you decide to implement.
Reviewing Plan Which Includes Stakeholders
After you have come up with incentive compensation management, your next course of action is to take that plan to the stakeholders and review it in front of them. Since they are responsible for the funds that will be provided to the employees as incentives, you need their approval before you implement the plan.
Implementation Phase Where Communication is Important
After the incentive compensation management has been approved by your organization’s stakeholders, you will be required to implement the plan. The moment you implement the plan, you will receive feedback from your employees, if the feedback is positive then your plan is being received well by the target.
This will ensure you get results soon and your plan will increase the sales of the organization with time. But in case the feedback of the target audiences is negative, then your plan has not been taken very well by them.
You will be required to either edit the plan according to some of the feasible requirements of the target or you can start from the beginning and come up with a new plan altogether.
This is the last step of effective incentive compensation management. Here you will be required to make any necessary changes that will come up with changing marketing trends with time. Although the base idea of the plan will remain the same, i.e. the employee which has made the most number of sales which receives incentives, you will be required to make changes in terms of condition and money.