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Recently, while teaching a course to a cosmetics company distributor in Quanzhou, Fujian, I discussed compensation system design. After class, a distributor approached me and asked: "Besides company compensation, are there other low-cost incentive methods?" Here are some incentive methods I shared with him for reference:
Communication: This is an incentive method that is easy to operate, low-cost, and often yields the best results. During the Long March, the Red Army's material conditions were poor—lacking medicine, food, and clothing—yet soldiers remained high-spirited and motivated. Why? I believe it was not only due to the equal distribution of "mess leftovers" (remaining income after food and uniforms) as material incentives, but also the "party branch on the company level" which strengthened organizational communication. Distributor companies can learn from this. Besides communicating work through meetings with departments and employees, they can also take the opportunity to go to the market with employees to understand market dynamics and provide targeted guidance. They can also hold cross-departmental joint meetings to observe collaboration, or even set up a "General Manager's Open Day" to proactively grasp company trends or signs and eliminate hidden dangers. They can also learn from leaders of European and American enterprises who, while queuing for meals or during meal breaks in the cafeteria, casually ask questions, listen attentively, and quietly complete two-way communication with employees from various departments. Of course, calling employees to your office or conducting one-on-one communication via phone, text, mailbox, or email is also feasible. However, for issues raised by employees, do not listen to only one side or take drastic actions. Always make decisions after fully understanding the situation to avoid hurting the innocent due to incomplete information. In fact, as a distributor boss who has moved past the startup phase, you should spend 60% or more of your time on internal and external communication, especially with employees. Only through effective communication can you eliminate barriers, build confidence in the company, show employees the company's future and prospects, and share hardships and successes together.
Praise: From the perspective of incentive effectiveness, nothing is more rewarding than recognition of oneself. On the basis of full communication with employees, distributor bosses should promptly evaluate employee behavior according to the job responsibilities and work indicators designed by the company, rewarding the good and punishing the bad, openly, fairly, and justly. In terms of rewards, even a small improvement or performance increase in a department, sales area, or employee should be promptly acknowledged. For outstanding performance, innovate praise methods by publicizing, posting, or publishing their advanced deeds through bulletin boards, display windows, internal publications, etc. The larger the scale or form, the better the incentive effect, and the easier it is to form a competitive atmosphere. Use more positive incentives because everyone craves praise; use fewer negative incentives because everyone resents being denied or punished. However, for the "black sheep" in the team—those who don't do their work, encourage others not to do theirs, perform poorly, and remain unambitious—firmly wield the "execution stick" and promptly dismiss or even fire them. Tolerating substandard employees who do not meet company requirements, or "incentive inaction," is an invisible offset to the incentives for excellent employees. Over time, the company's incentives lose credibility, and their effectiveness gradually diminishes until they become useless.
Dining Together: Chinese people's emotions are mostly expressed at the dining table, except for "Hongmen Banquet" style events. The reason it's said to be at the dining table is that dining culture is actually an emotional exchange culture, which we can also turn into an employee incentive culture. I often hear employees chatting about being proud to eat with the boss or senior management, reflecting the incentive effect of dining culture. At a company in Xinyang where I serve as a consultant, at the end of each month's meeting, the boss personally cooks a sumptuous feast for employees. Amidst clinking glasses, everyone opens their hearts and tells the boss things they wouldn't say in the office, allowing the boss to truly understand the actual situation. Employees also take pride in close communication with the boss, and their loyalty to the company is understandable. Distributor bosses should try to create opportunities to dine with employees and use it as a platform for mutual sharing, allowing employees to understand the company in time, especially new systems, policies, and plans. The boss can also grasp employees' thoughts, work, and life, thereby empathizing, and both sides understand and support each other, enhancing employees' cohesion with the company and more actively responding to market changes.
Training: As marketing or trading companies, distributor companies need some older employees in certain departments or positions, such as finance, warehouse management, and logistics. However, most positions, especially sales and marketing, are filled by young employees. These passionate employees, on one hand, need a challenging compensation system to meet their material needs; on the other hand, they also hope for a larger learning and growth platform to continuously possess "lifelong employability." Therefore, providing them with continuous, systematic training becomes a better incentive method. When I was teaching nationwide for Shuanghui, I learned that when notifying distributors, they clearly stated that only one core employee could attend the lecture. During the lecture, these distributor personnel were very active and used the opportunity as a window to showcase themselves. The Hunan Zhuzhou Yuantai Trading Company, which I have trained, even established the Yuantai Business School, continuously training employees. While employees' skills improved, the company's performance also grew synchronously. More importantly, it built a corporate "core" system that supports sustainable development, where employees and the company motivate each other and develop healthily together. Therefore, distributors can adopt internal and external training methods, combining internal training with external study, to show everyone that the company is a learning organization with unlimited potential.
Activities: Distributor companies often hold activities involving all employees, allowing everyone to feel the strong "big family" culture, which is also a good incentive form. Last month, when I was invited to teach at the Northeast Yingkou Jiutian Commercial Group, I participated in their "Beach Bonfire" evening party. The company's dozens of vehicles, sprayed with advertisements and hung with banners, formed a long line, grandly departing from the factory area, passing through the Wang'er Mountain Scenic Area, and finally reaching the seaside, where they "camped" on the beach. For a moment, the seaside was bustling with people and colorful flags. Besides sunshades and umbrellas with advertisements, there were also corporate signs inserted in the sand. The TV station also followed and filmed the entire event. Subsequently, the chairman and general manager, along with everyone, swam in the sea in swimsuits. Next were nearly 20 wonderful programs self-written, self-performed, and self-directed by all employees. I and the government officials invited by the company served as judges. The entire party was full of climaxes, attracting a large number of tourists, and employees were very engaged. After the event, everyone drank heartily and had an award ceremony. The activity, themed around gratitude, had an unprecedented atmosphere. The chairman, who started as a distributor, told me that they hold such a collective activity every year to show everyone the corporate vision or achievements shared by all. I finally understood the source of this group company's rapid growth in the three years since its establishment. In fact, distributor companies can regularly hold sports meets, speech contests, debate competitions, poetry recitals, cultural evenings, learning exchanges, essay contests, and other activities to get everyone involved, enhance their sense of belonging, and make the enterprise "alive" and "moving," avoiding a stagnant and lifeless state.
Of course, distributor bosses can also stimulate everyone's enthusiasm for participating in corporate construction by setting up development suggestion awards, talent recommendation awards, special contribution awards, etc., allowing them to play a sense of ownership and better participate in market competition.
Compensation incentives are not the only way. Besides compensation, we can certainly think of many other incentive methods, making compensation incentives and other incentives complement each other. This way, we can avoid the diminishing marginal effect of purely material incentives, and also give spiritual incentives a better foundation, thereby maximizing the incentive effect.