Motivation and compensation are tough to nail under normal circumstances and are even trickier during tough times. It’s safe to say that motivating your team in the current economic downturn is about as tricky as it has ever been.
It is possible that your colleagues or employees have acquaintances who have experienced job loss, salary reductions, or that your organization has undergone cost-cutting measures. Such circumstances may naturally elicit feelings of unease.
In this article we plan to resurface a few well-known, but often overlooked, principles of compensation and motivation that can boost you and your team during these tough times. Let’s get into it!
Real World Examples of How to Motivate Employees During Tough Times
Let’s look at an example of how motivation and reward go hand in hand. A call center uses a referral program to incentivize employees to refer their personal connections for open positions. It’s widely known that referral hires generally perform better, faster, and have a longer average tenure than typical employees. To make the referral beneficial for both the company and the referring party, the call center offered a $500 bonus once the employee was hired and actively employed for 90 days.
Super motivating right? Well, not exactly.
After 90 days, the call center found that employees who made referrals typically didn’t remember that they were owed a performance bonus and most didn’t even notice when it showed up in their paycheck.
In an effort to boost referrals and make high quality hires, the call center decided to split the referral bonus into two separate payments: $250 on the referral’s first day and $250 after they reached 90 days. And to increase visibility into the program, on the 90th day, the call center started sending out an email thanking the employee for the referral.
In the first month of the new program, the call center saw a 300% increase in referrals and overtime saw the average tenure and performance of new hires increase. Reflecting on this example, there are three notable hallmarks of a good incentive program:
- Simplicity
- Visibility/Transparency
- Appropriate Timing
Let’s take a look at how each of these factors plays a crucial role in a successful incentive program:
Simplicity
“That’s been one of my mantras – focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” – Steve Jobs
Simplicity, particularly when talking about compensation, can be defined in a lot of different ways. In this section, when we refer to simplicity we mean making sure your employees understand the whole story around their compensation. For example:
- Does your employee know that if they do x, they will get y?
- How does their goal roll into the team goal, department goal, etc.?
- When do they actually get their money?
Although this seems like it should go without saying, more often than not, reps are confused about how their comp plan really works. And, when motivation is the goal, a simple, easy-to-understand compensation plan can be more motivating than an overly complex one, which may result in confusion and frustration.
When an employee is able to easily and quickly calculate their potential earnings, the impact on motivation is immediate. This creates a sense of transparency and predictability which are both essential in times of economic uncertainty.
And, when your team understands how and when they will be rewarded, it allows them to focus on the key metrics that will have a direct impact on their earnings- eliminating other noise and distractions. With fewer variables in play, employees can easily identify the activities and behaviors that will lead to successful outcomes, such as closing more deals or increasing their average deal size.
Lastly, simplicity can foster a sense of trust between employee and employer. When there is no ambiguity as to how an employee is paid, it promotes a sense of fairness and equity within the sales organization. If a plan is overly complex, however, employees may be more likely to question its validity or accuracy- undermining trust and tanking motivation.
Visibility and Transparency
As we’ve already touched on, visibility is key to motivating workers in tough times. Think about running a race and having no idea how far you have gone or how much of the race you have left. How would you know when to pace yourself and when to kick it into overdrive? Most employees have very little visibility into their earnings and where they stand compared to their goals.
When employees understand how their performance is measured and how it impacts their compensation, they are more likely to feel a sense of ownership and accountability for their work. This can help them stay motivated and focused on achieving their goals, as they have a clear understanding of what is expected of them.
A few simple solutions to a visibility problem:
- Make sure you’re having important conversations with your team during one on ones- discuss progress to goals, identify points of confusion, and make sure they feel they have the necessary resources to succeed.
- Over communicate. Even when it feels like over kill, you have to assume your team has less information than you think. Be sure to add context, repeat information, and check in frequently.
- Celebrate wins in public. Reinforce financial rewards with public recognition to make sure your team associates wins with feelings of appreciation and celebration.
- Evaluate your tech stack. Do you have real-time data and reporting? Are the most crucial dashboards public and accessible? Most importantly, do your reps know where to find the data they need access to?
- Leverage the channels your team uses most frequently for important notifications. Think slack notifications, email updates, or push notifications.
Finding ways to add visibility into performance is key when trying to reach any goal and is especially important when there is a lot of noise and distractions both internally and externally.
Appropriate Timing
The effectiveness of a reward is directly correlated to the time it takes to receive it (source). Though we won’t go as far as comparing sales management to dog training, it’s an easy analogy that illustrates the same idea. In dog training, the idea is to reward good behavior when it happens so that the animal associates the reward with the behavior. So if you were outside trying to teach your dog to sit, but only gave him a treat after returning inside, the dog will begin to expect treats whenever he walks in the door and won’t ever connect the reward to the act of sitting.
In sales, this idea is more complex but similar. Of course, your reps know they’re supposed to be closing deals and generating pipeline. But, if the gratification of payment is delayed, the positive feelings and motivation won’t have the same impact.
More often than not, we hold employees earned rewards hostage for longer than needed. Now, there is clearly solid rationale behind not paying commission until a customer has paid or not giving a bonus until the end of the quarter, etc., but there are always ways to get creative and offer immediate incentives to supplement the final reward. Consider these questions?
- Can you offer a non-cash incentive like a gift card immediately following deals of a certain size?
- Can you increase the frequency with which commission is paid?
- Can you pay a small percentage of each commission before the customer’s check hits the bank?
Remember to think big picture about cost here. Going back to the original example: The call center calculated that it cost somewhere between $20-$40K to onboard and train each new hire. With that in mind, the $250 spent up front to generate higher quality, longer tenured employees was worth the risk.
In Closing
Compensation plans and incentives are essential tools for motivating sales teams during economic downturns. The current business landscape is characterized by increased competition and decreased consumer spending, making it more critical than ever to ensure that sales teams are motivated and productive. By designing and implementing effective compensation plans and incentives, businesses can keep their sales teams motivated and engaged, even during challenging times.
While it may be tempting to cut costs and reduce spending during a downturn, doing so can ultimately hurt the business’s long-term prospects. Instead, companies must focus on investing in their sales teams to ensure that they are performing at their best. With the right compensation plans and incentives in place, sales teams can not only weather economic downturns but also thrive in challenging environments, driving revenue growth and increasing market share.
