Compensation
& Benefits
Assignment
Pros and Cons of Individual and
Team Based Incentives for Sales
Professionals
Shubham S...
Individual Incentive pay plan
Pros Cons
Clear line-of-sight plan for participants Contributes to an “every man for himself...
o Employer Advantage
 Employers benefit from a team-based incentive plan is much the same way
they benefit from using a c...
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Compensation & benefits assignment shubham singhal

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Compensation & benefits assignment shubham singhal

  1. 1. Compensation & Benefits Assignment Pros and Cons of Individual and Team Based Incentives for Sales Professionals Shubham Singhal 80303120053 A051 PGDM- HR NMIMS, Hyderabad
  2. 2. Individual Incentive pay plan Pros Cons Clear line-of-sight plan for participants Contributes to an “every man for himself” environment Demands performance and results, for pay May hinder effective team sales behaviors Clearly differentiates between high and low performers Creates crediting issues when a sales effort comes from multiple contributors Encourages a strong “sales culture” Team-Based Incentive Pay Plan  Advantages: o Financially:  A team-based incentive plan helps increasing performance: If you don’t perform well, you don’t get paid. At group level, employees operating under a team-based incentive pay plan recognize that the greater their collective performance, the greater payday each will enjoy at the project’s completion.  Employees are often motivated by the fear of letting down their team members. o Group Effort  When a team paycheck is riding on the collective performance of several individuals, team members feed off one another’s energy and enthusiasm for the project.  Knowing that performance is tied to payment, team members are more likely to find ways to work together effectively as a group. There’s little room for disagreements, when all participants are working toward a collective, common goal. o Strength-Based Contributions  In a team effort approach, each employee brings a unique set of skills and experience to the table. When each member works in her own comfort zone, it creates a dynamic and effective team. One team member’s weakness may be another’s strength, which creates an overall balance. o Peer Pressure  Employees working on salary-based solo projects are usually held accountable to an immediate supervisor, whereas a member of a team-based incentive pay plan is held accountable to an entire group of people. Individuals who are not pulling their weight or contributing to the group in an equitable manner will usually be put on notice by team members that their performance level is unacceptable. This level of peer pressure prevents slacking.
  3. 3. o Employer Advantage  Employers benefit from a team-based incentive plan is much the same way they benefit from using a commissioned sales staff. If performance goals are met, both the team members and the employers make money.  If the goals go unmet, the employer loses less than he normally would be paying employees a straight salary or by hourly rate. o Reduce Employee Turnover  Attractive total rewards packages reduce employee turnover because employees who feel satisfied with their pay and conditions are less likely to be enticed by a competitor. Members of the team become committed to the shared goal and are reluctant to leave their colleagues. Lower employee turnover benefits companies by reducing costs of recruiting and training new employees.  Cons: o Spreads incentives across high and low performers, potentially leading to free-rider problem o Dilutes pay-for-performance culture o Hinders management’s ability to quickly diagnose performance driver(s)

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