Accountability, Team Building

Improve Morale with Performance Based Pay System

Improve Morale Performance Based Pay SystemFor organizations with representatives in the field, maintaining individual morale is vital to the continued success of the entire team. In the vast majority of field-based organizations, reps will be working face-to-face with customers. Whether the customer is a direct consumer of your product or service, a store manager, or another business, providing great customer service is crucial to retaining and delighting clients. Although it varies widely by industry, most experts agree that acquiring new customers generally costs between four and ten times as much as retaining existing customers. While there’s no definitive way to raise morale in every situation, one strategy field-based organizations should try out is performance-based pay or bonuses.

What Exactly is Meant by Performance Based Pay?

At its most basic, performance-based pay is exactly what is sounds like: bonuses or pay based upon how well something performs. Beyond this, there it a lot of room for the manager or business owner to create a customized system at their discretion. For example, in those industries where sales are the primary role of an organization’s field reps, paying reps based on commission may help to improve competitiveness and increase overall sales. On the flip side, increased competitiveness can lead to reps cannibalizing each other’s sales. Evaluating all of the potential outcomes of a compensation change before executing said change is extremely important—more often than not the initial reception to the change will be mixed.

What Are Some of the Ways I Can Compensate Employees?

Gain Sharing

Gain sharing is a form of compensation where employees are given a percentage of overall profits in areas that their work directly influences. This should supplement standard pay—not replace it. Another great compensation strategy for competitive environments such as sales, gain sharing allows employees to be an active part of their own success, can help to create a more unified team, and often builds company loyalty. Reps in the field will be happy to know that they can directly influence how much they gain that week or month, so long as the area of the business being used as the barometer for success is actually influenced by their actions.

Metric-Based Bonuses

A compensation strategy better suited for those organizations where sales is not the primary role of reps in the field is metric-based bonuses. These are one-time payments directly linked to KPIs. If the primary role of reps in your organization is merchandising or servicing, then some of the KPI goals being measured might include number of perfect planograms or an average customer satisfaction above a preset level. Think about using a tool to accurately determine and measure your KPIs - like a Mobile CRM software. Bonuses do not need to be strictly financial, and could include additional job perks or the promise of new client accounts. Managers should prioritize their KPI goals and compensate accordingly. If certain goals are more important to the overall success of the organization, the rewards associated with successfully meeting goals in that area should reflect that.

Won’t This Cost My Organization Additional Money?

It has the potential to, but executed correctly, a performance-based pay system should actually bring in more money than it costs. This is why the planning process is so vital—determine your ROI before implementing any kind of compensation program. If your organization is regularly collecting data on customers then it shouldn’t be too difficult to determine customer lifetime value, the effect of poor customer service on individual customer profits, and more. Use this information to determine what will make the program worthwhile to all parties involved. At the end of the day, performance-based compensation is not right for every organization, but it should certainly be given consideration when looking for a way to boost employee morale and raise performance.


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Cam Garrant

Cam Garrant is the marketing manager at Repsly. Passionate about delivering quality content and data-driven insights, Cam's interests include SEO, basketball, and bad jokes.

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