Why Companies Keep Getting Rewards Wrong
by Derek Gardner MBA
The Porter-Lawler Motivation Model is an excellent guide to help understand the correlation between incentives and an employee’s personal motivation to perform. Far too often companies invest a lot of money in rewards plans in the hope that these incentives will help to “motivate” their staff to perform better. This problem is even more acute in sales, where leaders seem to believe that a great incentive plan will guarantee success.
Let's have a look at the Porter-Lawler Motivation Model in a bit more detail and understand why it is easy to make the "big rewards=big results" mistake. For this purpose I have delved deeper into the model to focus on the effort part more closely (ability and role perceptions), as it is a key cog in the motivation wheel.
The Motivation Model suggests that EFFORT will drive PERFORMANCE, and PERFORMANCE will translate into RESULTS. Excellent RESULTS will lead to JOB SATISFACTION, which means happy staff performing consistently. This makes perfect sense, and I’ve seen first-hand how happy sales teams deliver top results on a consistent basis. However, this doesn’t mean the teams were happy BECAUSE OF their rewards plans.
The model also takes into account additional factors, such as adding in rewards to drive EFFORT, actual REWARDS PERCEPTION, the employee’s own ROLE PERCEPTION and their ABILITIES & TRAITS in relation to their job.
Business leaders tend to focus on the VALUE OF THE REWARD part of the model, because the perception is that if people are rewarded well they will perform to a high level. This is especially true when designing commission plans for their salespeople.
The other potential issue is that rewards companies, when they are engaged to design a rewards programme for a business, focus their sales effort on the VALUE OF REWARD part. This is a natural focus for them, because their revenues are affected by the value and amount of products that get redeemed through their programme. Therefore, their reasoning to justify VALUE OF REWARD is that you have to pay well to get success. Leaders can also get sold on the idea that a good rewards programme will do the work for them with regard to driving their people to deliver results, in effect reducing the leader's responsibility in this area. This is a risk-filled perception.
However, as many leaders have discovered, simply offering big incentives to salespeople (or staff in general) doesn't guarantee high performance and great results. Consider a company reward programme you may have been involved in personally before. Ask yourself why everyone didn't hit the heights and claim the top prizes available. Ask yourself why so many people had low involvement in the reward programme, and didn't seem fully engaged. Here is the key reason why. Business leaders need to shift their focus away from the VALUE OF REWARD, and look closer at ROLE PERCEPTIONS and ABILITIES AND TRAITS.
If you don't feel you are in the right role for you, there is a very high probability that you will fail in your work. Also, quite obviously, if you don't have the abilities/traits to do a certain role, there’s a very high probability that success won't follow. Therefore, regardless of how brilliant the incentive programme is, you will struggle to reach the levels required to claim the rewards available. This will leave you feeling disengaged and demotivated, even resentful of the over-achievers and your leaders for putting in place an "impossible" reward scheme.
The other part of the model that business leaders can quite easily miss is that rewards are made up of both INTRINSIC and EXTRINSIC REWARDS. The EXTRINSIC REWARDS are those that exist in plain sight, i.e. salary, holiday, commission plan, company car, medical plan, bonus, etc. The INTRINSIC REWARDS, such as the pat on the back for a job well done, the personal thank you, the leader's recognition that you are helping the business through your performance, are quite often the most valued of rewards and cost nothing. I have, on many occasions at companies where I've assisted leaders with their growth strategies, had their people tell me that all they want is a pat on the back from their boss. That’s very telling, and shows how leaders can be perceived to be “invisible” by their staff.
Here's the thing that makes the Motivation Model function at its optimum. EFFORT, underpinned by ROLE PERCEPTION and ABILITIES & TRAITS, drives PERFORMANCE, and the combination of INTRINSIC and EXTRINSIC REWARDS along with PERFORMANCE will result in SATISFACTION. If EFFORT is low, then PERFORMANCE will suffer and SATISFACTION will be low, leaving you with unhappy staff. Therefore, if EFFORT is high, then RESULTS and SATISFACTION will be high.
Where you have a high-performing salesperson in your company who is driven and committed, your key challenge is to retain their services. This is where VALUE OF REWARD comes into focus. If the salesperson feels they are not being rewarded adequately against their EFFORT and PERFORMANCE, then there is a high likelihood that they will seek to take their talents to a company where they believe their EFFORT will be recognised and valued.
Leaders need to reward people for their performance, not offer a reward to try and get them to perform. If you are considering putting a rewards programme in place because you need to improve results, you are going to be disappointed. Your results aren’t where you’d like them to be because of factors other than incentives, for instance wrong people in the wrong roles. An example is placing an Account Manager personality (farmer) in a New Business (hunter) role will guarantee a struggle to deliver results and eventually lead to failure.
Rewards programmes are good to have, and they do help to drive business. However, they need to be accurate as to who they are targeting. Regardless of the sales incentives you decide to put in place, you still need have the right salespeople in the right roles for them to be effective.
So how do you ensure that you have the right salespeople in your company delivering the results that you need to grow your business? One of the strategies that you can implement is to use a management tool such as Selling Profile to help you understand the composition of your existing sales team and also to help you focus on hiring the right people for future roles that you need to fill. Understanding the Salesperson Insight Gap with regard to role suitability will be a big plus.
A great looking CV and tons of experience doesn't guarantee you are getting a salesperson that will succeed in a specific role, or be comfortable working in your environment. Selling Profile gives you a unique insight into what makes a person tick in a certain role/environment, and therefore helps to increase your and their probability of success.
Rewards are important, but accurate role placement, especially in sales, is CRITICAL.
Derek, a visionary thinker and innovator, is an experienced sales professional/leader and strategist who can help you to assess your current business situation and look at how you can get to where you want to be.
To view his profile and contact him via Linkedin please CLICK HERE