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Posted: October 17, 2011

Newsflash: Rewards work

Just ask, "What's in it for them?"

Todd Ordal

Home health care companies were recently chided for altering their treatment programs to align with new Medicare payment programs ... and that was a surprise to the government!

A new product introduction fails to get off the launch pad. Poor features? Weak market? No! The incentive for the sales team was misaligned. Recurring revenue streams from existing products produced a better commission than the new product.

Years ago when I was an executive at Kinko's, Xerox was frustrated with us because we wouldn't respond to new products, deals and incentive programs they offered throughout the year. Why? We knew that at the end of the quarter they'd offer screaming deals if they were off their sales plan. They'd trained us well.

Some recent news indicates that medical doctors perform surgery when other, less-expensive options are just as effective. Surprised? How about when car salesmen steer you toward the sexier, more expensive model ("Man do you look good behind the wheel of that one!") when the vanilla model meets your needs?

I recently shopped for a new mountain bike at my favorite bike store. The sales guy spent a long time with me and asked a lot of questions about what type of trails I like to ride, what bike I'd been riding, etc. Rather than have me test ride the several expensive bikes I'd been looking at, he said something shocking: "I don't have what you need, but here are two models you should consider." He then pointed me to a competitor's shop.

As an executive, you get what you reward. Oh yes, some people have internal reward systems that are impervious to what you may offer, but that's the exception, not the rule. Rewards come in many flavors. Money, praise and advancement are a few. So are continued employment and lack of punishment, but those usually get compliance, not commitment. I don't know what reward practice they had in place at the bike shop I mentioned, but it wasn't straight commission.

I've worked with talented executives who are surprised when someone's behavior (or everyone's!) does not match expectations. Oftentimes, it's as simple as asking, "What's in it for them?" and you'll have a better idea why.
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Todd Ordal is President of Applied Strategy LLC. Todd helps CEOs achieve better financial results, become more effective leaders and sleep easier at night. He speaks, writes, consults and advises on issues of strategy and leadership. Todd is a former CEO and has led teams as large as 7,000. Follow Todd on Twitter here. You can also find Todd at http://www.appliedstrategy.info,  303-527-0417 or todd@appliedstrategy.info

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