With the economy in a sour state one of most important things a company can do is re-evaluate what it means to be successful.
Often incentive and reward programs are designed using previous performance as the benchmark for future rewards. Hit or exceed your target (based on history) and receive your incentive. In most stable economic times that would be acceptable. Companies want growth. People want growth. Win-Win. But we're not in a very stable economy today.
It's time to re-evaluate what it means to be successful and it's time to re-evaluate what you ask your employees and channel partners to do to earn their incentive.
It's not always about hitting a goal...
I've sat in my share of company planning meetings and talked about our company's marketing, sales and operations plans. I've listened to many of my colleagues and myself - provide a recap of our department's progress toward goals. I've had many meetings where I've been able to report successes. I've had a few where I reported failures. My compatriots did the same. A common theme in the reporting of successes is (surprise!) we all were instrumental in achieving our goals. But in the case of our failures - we were victims of the market, turnover, competitive and uncompetitive practices. In other words - we had some good reasons why we didn't hit our performance metric. In some cases they were valid - in other cases they were flimsy excuses at best. One of the favorite tactics employed was to point out that in situations where we didn't hit our goals - we at least did do better than our competition. In other words, we took solace in the fact that while not perfect - we were better than others - our performance relative to our competition was better. And we were good with that.
Relative Performance is Important
I'm not suggesting that missing goals is a good thing. I am suggesting that in some cases, relative performance is a much better proxy for success than absolute performance. As managers in a company it is important that we understand that difference and adjust for it. If the market in general is down 20% compared to last year it wouldn't be surprising if individual sales performance is down as well. Sales people are a reflection of the market. Superstar sales people are the reflection of superstar performance - but the average performance in your sales force is probably a great reflection of the market on average. It would be a mistake to maintain the same award standards for your sales people in an economy that is down 20%. Adjust for the market - look at relative performance.
This is not only important in your sales force but in other areas of your company that are influenced by reward and recognition programs. Adjust the program criteria as needed to ensure you're taking into account the environment the people are working in. Look for ways to measure relative performance in all areas of your company and reward successes against that benchmark.
The beauty of a well-designed reward strategy is that you have the flexibility to incorporate these types of changes. If you don't then consider that a to-do for this quarter. Find a way to allow departments, divisions, groups to reward relative performance.
Don't stop setting goals and rewarding attainment - just make allowances for "black swans" in business that could affect the way your audience performs.
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