Yesterday, I had dinner with two provincial managers from a brand, and we discussed their daily personnel incentive plan. Their plan is as follows, using a newly launched product A as an example.
The provincial organizational structure is: Provincial Manager - Regional Manager - City Manager - Sales Director - Brand or Distributor Sales Staff.
Headquarters issued a personnel reward plan: During the promotion of new product A (a functional beverage with a retail price of 6 yuan per bottle), a personnel incentive of 1 yuan per case is provided. Each province is required to allocate and distribute it according to actual conditions. The final allocation plan is: Align goals at all levels, and split the 1 yuan across all levels based on the distributor's actual shipment volume, with each level taking its share.
I asked how it was working. The answer: It worked well in the first few years, but now it's getting worse. I said that's right. In previous years, products could sell themselves, but now even with push and pull, they don't move much. When sales slow down, adding incentive temptations can lead to speculation, harming the team and the market.
Today, I'll analyze several core viewpoints on personnel incentives based on this case.
-01- First Core: Authenticity
I once experienced a situation where the company gave monthly target achievement rewards during the peak season. Some employees helped each other to get rewards. Supervisor A's distributor Zhang San's warehouse was full, but payment was made to the company, and goods were shipped to Supervisor B's distributor Li Si's warehouse. This way, Supervisor A got the reward, and the next month Supervisor B returned the goods to Supervisor A in the same way. What are the consequences?
- The company's incentive purpose is not achieved, and it also interferes with senior management's judgment of the market.
- There are no walls without cracks. Other supervisors will feel severely unbalanced and follow suit, causing a shift in team values.
- Distributors are exhausted, worrying constantly about a truckload of goods worth tens of thousands of yuan, feeling mentally drained and resentful towards the brand.
- The chaos in the source code of goods is a breeding ground for cross-region sales. In the long run, the market will suffer greater damage.
Therefore, authenticity is the first core of personnel incentives. If authenticity cannot be achieved, incentives are more harmful than punishment, and having data is more harmful than not having data. Authenticity can unite the positive energy of the enterprise, and verification is more important than trust.
A prerequisite for formulating an incentive is to ensure the establishment of clear work goals and requirements for the audit team.
-02- Second Core: Fairness
In the actual case above, the new product A has a retail price of 6 yuan per bottle. Although I only heard from a friend about the product's differentiation, uniqueness, and promising market prospects, based on the combination of retail price and new product, I feel that sales across marketing units in a province will vary greatly.
- There will be significant differences in sales between economically developed regions (provincial capitals) and less developed regions (prefecture-level cities).
- There will be significant differences in sales between modern channels and circulation channels.
- There will be significant differences in sales between regions with large populations and those with small populations. If a one-size-fits-all approach is used, it will be unfair.
Suggested incentive plan:
1. Develop a city-level coefficient:
Many companies have a formula for base salary, i.e., the city coefficient. With the same base salary, the coefficients for first-tier and third-tier cities are different, resulting in different take-home pay. You can similarly develop a reward coefficient (but opposite to the base salary coefficient: the higher the city level, the lower the coefficient).
2. Develop a resource investment coefficient:
Develop a reward coefficient based on the sales expense rate of the product. Products with higher expense rates get lower rewards, which is acceptable to everyone.
3. Develop a comparison coefficient with old products:
For example, a mature old product B on the market has a retail price of 5 yuan per bottle. You can use the historical sales data of old product B over the past year to develop a comparison coefficient for the target sales of new product A.
The above suggestions correspond to the problems one by one and can be adopted as appropriate based on actual conditions. However, one point must be emphasized: The negative emotions brought to the team by an unfair incentive far outweigh the negative emotions brought by punishment.
-03- Third Core: Different Incentive Standards for Different Levels
The following pictures were taken during my market visits in mid-January 2020. Let me share them with you.
Explanation: 1) These four photos are from the township market of the same county-level city; 2) Jinmailang's batch number is June 2019, Tsingtao Beer's batch number is November 2019, Siyuan Instant Noodles' batch number is September 2019, and Master Kong's batch number is December 2019.
Now the question arises: Suppose you are a distributor simultaneously representing the above four products:
1. Jinmailang and Siyuan face the problem of nearing expiry. Should you penalize the sales staff? What about their direct superiors?
2. Tsingtao Beer and Master Kong Instant Noodles have fresh batch numbers. Should you reward the sales staff? What about their direct superiors?
The answer is here: Different levels of personnel receive different incentive standards.
1. Frontline sales staff: They should receive incentives if they meet the process management standards. 2. Junior managers: They should receive incentives if they meet the goals of process management standards. 3. Middle managers: They can receive incentives only if the proportion of direct subordinates receiving incentives meets the standard. Note: A supervisor who cannot distribute the incentives given by the company is not a good supervisor. 4. Senior managers: They can receive incentives only if all comprehensive indicators set by the company are met.
Now, looking back at the initial question, how should personnel incentives be set for new product A?
1. For sales staff, the incentive direction is:
How much reward for distributing to one store? How much reward for making one display according to the specified visual merchandising standards? How much reward for one store that reorders new product A? Set a minimum indicator, and how much penalty for not meeting it per store?
2. For sales directors, the incentive direction is:
For the market under their management, they can receive the reward if they achieve 100% of the indicators for the number of stores distributing new product A, distribution rate, and number of stores with standardized displays. Set a minimum indicator, and how much penalty for each 1% shortfall?
3. For city managers, the incentive direction is:
For example: Based on the number of subordinate sales directors, how much reward for achieving 100%? How much reward for achieving 80%? How much penalty for achieving below 60%?
4. For regional managers and provincial general managers, the incentive direction is:
How much of product A is shipped from the factory? What is the total inventory at distributors? What is the sell-through rate? What distribution and sell-through measures are designed? How is the coordination between online promotion and offline activities? Ultimately, a comprehensive evaluation determines whether the promotion of product A is successful. If successful, they receive the reward; if not, they accept punishment.
To summarize: The era of goal-oriented, consistent, and integrated assessment is over because the assessed personnel have changed, and the market has also changed. Sticking to old rules can only lead to failure.
Let me give an example of a salesperson born in 1998 that I experienced: My goal is clear: my job is to distribute the new product to terminal stores and complete the visual merchandising according to company requirements. Once the task is done, I should get the reward. Whether it sells through is another level of work and not something I can decide at my level. If the two are mixed together, I would rather not do this job or quit.
Indeed, each level has its own responsibilities and considerations. The purpose of personnel incentives is to efficiently advance a project. Since levels differ, incentive plans naturally cannot be the same.
-04- Fourth Core: Monetary Incentives Are Not the Only Effective Means
Incentives must grasp the internal needs of employees, find their pain points, link their needs and pain points, truly stimulate employees, and take appropriate ways to satisfy them. Otherwise, it is not an effective incentive.
To motivate employees, you must understand their motivations or needs. First, clarify two basic questions:
1. No two employees are the same; 2. At different stages, employees have different needs.
The same amount of money has different value to employees with different incomes; for some, money is always extremely important, while for others, it is never that important.
Therefore, when setting incentive plans, you don't have to focus solely on money. You can also consider:
1. Respect incentives: Gain praise from colleagues and leaders by achieving indicators; 2. Position incentives: Gain promotion by achieving indicators; 3. Training incentives: Gain opportunities for further training by achieving indicators; 4. Spiritual incentives: Gain honor certificates and industry recognition by achieving indicators; 5. Travel incentives: Gain a chance to travel with family by achieving indicators, which is both a reward and a way to increase family support for the employee's work, etc.
-05- Fifth Core: If Conditions Allow, Try to Give Incentives in Advance
Take new product A from the beginning of the article as an example. If the company allows, after setting the indicators, what would be the effect of distributing the incentives while promoting them?
For example: Salesperson Wang Wu has a target of distributing new product A to 50 stores, with a reward of 20 yuan per store. When announcing the assessment incentive, first give him 1,000 yuan directly. After the assessment period, if he fails to complete, deduct 20 yuan or 30 yuan per store. The effect should be better. The reason is simple: the pain of losing a bird in hand is far greater than the bird never being in hand, and the incentive effect will be magnified several times.
Advance incentives are a way of empowerment. For enterprises, empowerment means giving employees certain abilities and energy. Its core feature is being proactive. In today's innovation era, empowerment is clearly more effective than traditional incentives because traditional incentives focus more on post-hoc and individual aspects, while empowerment focuses more on pre-action, culture, and team collaboration.
Final Thoughts:
Enterprise development requires employee support. Managers should understand that employees are not just tools; their initiative, enthusiasm, and creativity will have a huge impact on the survival and development of the enterprise. To gain employee support, you must motivate them.
Everyone craves a sense of belonging, achievement, and control over their work. Everyone wants to be autonomous, to have their abilities displayed, to be recognized, and to have their work meaningful.
Therefore, while implementing external incentives, enterprises should combine their actual situation, comprehensively use various incentive methods, link the purpose and means of incentives, change thinking patterns, and truly establish an open incentive system that suits the enterprise's characteristics, the times, and employee needs, so that the enterprise can remain invincible in fierce market competition.
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