How Not To Incentivize Employees

Recently, I published a post about how correctly incentivizing employees’ fuels performance. This post is focused primarily on the devastating counter productive consequences that stem from rash, disproportioned, or poorly thought out incentives.

I read an article recently (I wish I knew where I saw it) about a sales representative who had surpassed a very difficult sales goal, and in turn won a monthly sales contest. The sales rep in disgust described how distraught he was when rewarded a $50 gift card. Now at first glance without further information, you might think, wow, that company has a fairly effective bonus structure in place. But then the rep shared the total amount of their sales for that particular month, and eyebrows were raised. The rep sold 200K+, spanning several new business accounts. Now I don’t know this particular organizations gross profit, along with several other variables, but I can see why a rep might feel this way. I’m pretty sure the rep didn’t go and tell all their friends about the cool place they work for following this particular scenario.

Let me share a personal example to further illustrate my point. Years ago, I was an inside sales representative making cold calls all day long, and closing everything that I could, for a fairly small wage. Making sales required exceptional diligence and a vigorous ability to keep “smiling and dialing.” My manager introduced a fun and worthwhile “sales contest” to the 40 sales representatives for one day. We were informed that the winner would be given a desirable reward and earn the praise of our fellow reps.

Each one of us reps fell prey to a manager’s misplaced and misleading enthusiasm. We believed the reward would be commensurate with the effort it required to be the number one rep. We assumed management knew this. So we all worked as hard as we could every hour of the day, skipped lunch, and several of us remained a couple hours longer than our normal 8-hour workday. Well, long story short, I prevailed. I was ready to accept a substantial gift card or bonus or something. My manager smiled, said congratulations, and directed me to an open drawer to choose any 1 prize I desired. My fellow sales reps were all standing around watching, it was exciting. I opened, looked in, and I saw mini bags of chips, a few candy bars, kids toys, and a weird book from the dollar store..

I don’t think I need to explain to you all what a demoralizing experience this was. I selected a bag of chips (I missed dinner at home for this) and raised it up to the other sales reps. Some individuals laughed and some were appalled. I walked back to my desk and told myself I will never, ever, reward hard working and deserving people in such a manner. I never viewed the company or my manager the same after that. For the next few months, I saw similar “payouts” to other reps, which began to push me to start looking elsewhere. I left relatively soon after. This surely is a sad example of how some “incentivize” others. In my case, it incentivized me to “get out.”

I realize these examples might be on the more extreme and rare side. You get the point though. I absolutely know that many employees (not just sales reps) are under rewarded, under recognized, and under valued in companies all around the globe. Being morally ethical in rewarding others for their hard work is honorable and expected. The confidence, success, reputation, and culture of an organization thrive or wither based upon how well employees are incentivized with tangibles or intangibles.

Give people what they deserve despite their title, intelligence, education, or influence. Providing disproportioned incentives hurt, not help, employee performance ironically. The simple answer? Do unto others, as you would have them do unto you. Be that empathetic person that doesn’t ever over pay, but never under pays. Unmotivated and demoralized employees output is predictably poor. Motivated and loyal employees output is always great.

Can anyone relate?

About the Author – Chad Gundry has spent several years in sales and marketing positions and has accumulated extensive insight that can assist in constructing transformational business strategies and living life more productively. He is not a “writer", but enjoys sharing his views on a variety of subjects. Views posted here are his own and do not necessarily reflect those of Rakuten Marketing.