9/8/2008 12:02:00 PM
Five key questions to find the right commission scheme
Trying to match incentives on the shop floor with the objectives at head office has been a recurring theme over the five years I have spent running the two largest UK mobile phone retailers.
Retail pay and incentives are as relevant and important today as they have ever been. I have studied the relationship between rewards and performance across a range of sales environments inside and outside of retail, and have come to some conclusions.
It is worth remembering that a reward scheme can only be effective with good management. A reward scheme is a framework for the entire salesforce, but management is there for the top and bottom of the organisation to inspire and encourage.
There are five important questions employers should ask on retail rewards.
1. Does one visit per month from a mystery shopper determine the quality of service, when the vast majority of mobile retailers do hundreds of thousands of transactions?
Mobile retailers invest heavily in rewarding staff for sales and service, yet spend little time gathering customer feedback. I believe this is going to change as we embrace much more sophisticated and detailed methods already employed by the likes of Nike and Starbucks in America. An offer of 25% off your next purchase or a free coffee if the customer takes part in an online survey about the experience they had in store. It gives more than a score, it gives a detailed performance analysis. The survey is an ideal base to start a service-based discussion between the salesperson and manager. It can really accelerate performance when operated in tandem with a strong manager and an effective reward scheme.
2. Should reward be based upon individual performance or store performance?
Modern schemes employed by the likes of DSG, Comet and Carphone suggest a drift back towards the latter. Team incentives only worked when underpinned by two things: you have to be confident that the team ethic is strong enough to lift the poor performers, or you have to rely on your performance management ability through coaching and reviews to fix the people at the bottom end. There is no point in having a reward scheme that rewards exceptional people if you don’t have exceptional people. You have a scheme that’s right for the people in your team.
3. Is the scheme clear and simple?
Layering initiative on top of initiative in the belief that it will encourage different behaviours is futile. If your employees
cannot describe the reward scheme and understand in one minute how it affects them, the scheme is too complex, and it will just confuse and discourage them.
4. Do you know your people, and what motivates them? Can you link these to your objectives?
The trick is to understand this and build an achievable scheme accordingly.
5. Is the scheme embedded into your company DNA?
Your reward scheme should be discussed regularly and openly with senior management. Employees should be able to offer their ideas. Can the scheme be seen and calculated easily and daily by your people?
All employees in mobile retail serve three masters: the owners of the business, customers and management. The right incentive scheme on the shop floor must hit the needs and objectives of the three parties.
The perfect reward scheme does not exist, but if yours matches your culture, encourages better performance and is simple to understand, track and use it. It would be ahead of everything out there in mobile retail today.