"Sales solutions, which are more and more diversified and have a strong technological component, have an impact on the entire organization. The phases of product presentation and discovery of customer needs are more complex and it becomes objectively impossible for a single seller to talk about the global value. ", Frédéric Vendeuvre, Co-founder et Managing Partner Halifax Consulting
Incentive compensation policies have traditionally focused in the use of individual objectives. Nevertheless, with the willingness to increase the commercial performance, we observe the introduction of compensation criteria introducing the collective objectives. Thus, some sales processes, previously limited by an extreme individualization, have seen the development of a new mode of financial compensation, encouraging more cooperation between teams: the collective variable.
The inclusion of new collective criteria in the calculation of variable pay compensation promotes team spirit and represents a strategic managerial leverage, particularly within the rapidly changing business function.
Indexing a portion of variable pay to collective goals would stimulate collaborative work, however, what are the advantages and disadvantages of this new pay trend? How does the introduction of collective objectives promote team cohesion? What impact on the recognition of individual work? Some findings in this article
1) COLLECTIVE OBJECTIVES TO STIMULATE COLLABORATIVE WORK
"To foster the team spirit that is often lacking in sales teams, the collective incentive is proving to be an effective lever. It helps to motivate all salespeople around the objectives of the company, to create a dynamic and develop a team spirit. ", Jean-Michel Azzi, Managing Partner Bilton Consulting
Collective objectives promote teamwork
The collective objectives setting is an effective way to push for more collaboration between employees. The stimulation of collaborative work is the only good reason that can convince a company to introduce collective objectives. Face to an increasingly complex sales process, it is essential to have pre-sales teams collaborate with those finalizing the sales process. In this configuration, where pre-sales and sales are complementary in the success of a sales process, it is very interesting to propose collective objectives when individualization would be difficult or impossible to implement. In some areas, it is almost impossible to set individual sales targets. This is particularly the case for Fnac stores (book sector), which offer their booksellers monthly collective targets indexed to the total sales of the point of sale instead of individual sales objectives. Thus, in some cases, it is preferable to promote collective objectives, which will be preferable to a lack of a variable pay system.
The creation of a collaborative link makes sense when the expected result directly depends on the joint work between several different people from different jobs. This is particularly the case for pre-sales engineers and sales engineers, these are two distinct businesses, stakeholders at different levels of the sales process but highly complementary. The sales engineer, will be in charge of the analysis of the technical environment of the customer and the acuteness of approach brought to finalize the sale, while the engineer or the commercial pre-sales, will participate in the choice of the good solution to bring to the customer and will guarantee a certain serious technique. The pre-sales profiles are often technical and are not afraid to discuss in detail the technical dimension of each sales project with the customer, both speaking the same language. Like sales people, they like the relationship and participate fully in the success of a sale. Thus, these two different functions are totally dependent on each other in the finalization of complex sales.
To another extent, some companies choose collective goals to avoid the pitfalls of the individual goal. This is particularly true of the Nocibé group (cosmetic sector), which has chosen to set target, for store beauty advisors, collectively rather than set individual sales targets. The idea is to promote collaborative work between employees but also to offer a better shopping experience to customers, who do not find themselves beset by several sellers at a time. Customers feel less oppressed in shops where advisors work together to achieve common sales goals. The general atmosphere in the shop is much improved and the company avoids the individualistic behaviors by setting up of individual objectives.
2) THE COLLECTIVE OBJECTIVE SYSTEM IS HAVING DIFFICULTY TO REWARD THE EFFORTS PROVIDED BY THE MOST INVOLVED EMPLOYEES
Collective objectives: limited effectiveness to distinguish individual contribution
At a time when more than 60% of executives, all functions together, benefit from a system of variable pay compensation, companies see in the setting of collective objectives the possibility of fostering collaborative work.
The Information Technology (IT) sector is already experimenting with a system of incentive based in part on the setting of collective or collaborative objectives. This is notably the case for Microsoft, which rewards its employees according to individual but also collective objectives in order to promote cross-functional work between the group's various businesses. Orange, the telecoms top company, is also thinking of offering its staff a variable income that offers the right place to collaborative objectives. Nevertheless, it is important to note that such a compensation system may have several disadvantages. Firstly, a incentive compensation system based on collective objectives can easily be likened to profit-sharing, which already pays for each employee's participation in the company's collective projects. Secondly, this system, which values collective objectives, makes it difficult to distinguish employees who provide the most effort and thus reward them for their strong involvement. Indeed, individual work is hidden by the collective work done by a team, sometimes composed of several different functions. As a result, it is not easy to reward everyone based on their actual investment.
In the retail sector, some companies have chosen to offer the same bonus for an entire department. In that sense, the Nature & Découvertes group gives, to all sales advisers, the same bonus to ensure the individual objectives does not supplant the collective interest and, ultimately, does not alter the quality of the customer relationship. These bonuses, allocated homogeneously, are also offered to web teams as a reward for their participation in the overall turnover of the company.
The introduction of incentive compensation based on collective objectives can foster collaborative work and contribute to greater commercial performance, provided that the objectives are regularly adapted to the company's strategy!
