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Incentive Programs in Increasing Sales Efficacy

The manager of a large retail store shoe department setup a new sale incentive program for a 3month period as a way of increasing employee motivation, morale, and boosting sales. At the end of the 3month period, sales results showed the department sales group had failed to meet their sales targets, and motivation and morale remained the same as previous to the 3month period.

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What specific areas should the manager look at to explain this behavior as to why the targets were not met ?

The above case questions the efficacy of incentive programs in increasing sales and revolves around two kinds of behavior: selling behavior of the employees and the buying behavior of the consumers. The manager is targeting the selling behavior of the employees and hopes to reach the target through incentives for his sales personnel. The fact that the incentives have proven ineffective might be due to certain flaws in the incentive program and also might be due to inability to motivate the buyers.

Assuming that the product is designed, priced and marketed so as to provide incentives for the buyers, one can discuss what might have gone wrong with the incentive program launched by the manager. All incentive programs are based on a formula for improving motivation that involves four basic variables: effort, performance, outcomes, and satisfaction. Employees will put in the right amount of effort to meet performance expectations if they receive the kinds of outcomes (raises, promotions, etc.) that will give them satisfaction.

The problem in this given case is that it focuses only on the offering of outcomes and ignores the three major issues that are a part of Vroom’s theory of expectancy: “Can the person reach the target?”; “Will outcomes be tied to his performance?”; “Will outcomes be satisfying to him?” (Green and Butkus 20). The first involves a link between employee effort and performance. Employees, who are not able to meet targets, should be given training to enable them or the target should be reset so that its reachable. Incentives should be based on his level of performance. In this case, salesmen who exceed the target should be rewarded specially.

Finally, the incentive should be one that is desirable to the employee. All employees are not motivated by monetary incentives. Other motives such as power motive, achievement motive, affiliation motive, etc could be used along with the incentive program (Luthans 233). For example: Prizes maybe given for the person reaching the target the earliest (achievement motivation); the salesperson may be promoted as team-leader for consistent performance over a longer period of time (power motivation) and giving them membership to exclusive clubs as incentives (affiliation motivation). These areas should be looked into by the manager.

Applying relevant OB theory, what specific recommendations do you propose, as the manager, to ensure that future staff behaviours results in meeting the sales targets ?

B.F.Skinner’s reinforcement theory holds that incentives work towards motivating people (Hobert 2). Whenever behavior is followed by a reinforcer or an incentive, the behavior increases in frequency. However, what is pleasing to one person will not work for another individual and positive reinforcers are different for different people. According to the reinforcement theory, reinforcement of behavior is most effective when the reinforcer occurs immediately after the behavior.

Continuous reinforcement must be used to increase the performance of an activity (Hobert 2). For example, if a salesman is making five sales per day, and if the desired performance is ten per day, the salesman should be reinforced when he makes six, and then when he makes seven, eight, nine, and finally ten. Reinforcing every improvement is more likely to get the salesman from five to ten per day, than is the offer of reinforcement when, and if, he ever gets to ten per day.

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The above case makes use of a fixed-interval schedule of reinforcement of three months during which he has to reach the target. This fixed interval schedule ahs been found to produce uneven response patterns with an increase in response rate near the end of the interval (Hobert 3). This means, the salesman will put in his strongest performance only during the third month. According to the reinforcement theory, the variable interval schedules are more effective.

A variable-interval schedule of reinforcement involves delivering a reinforcement following an average, but varying passage of time. Each interval of time would be unpredictable, but the average would be three months in this case. This schedule requires the performer to perform consistently to receive his incentive.

. Vroom’s expectancy theory of motivation is built around the concepts of valence, instrumentality and expectancy and is normally called the VIE theory. By valence, Vroom refers to the individual’s desire for a particular outcome. A major input into valence is the instrumentality of the first level outcome to a desired second level outcome. A person would be motivated towards superior performance because of the desire to be promoted.

The superior performance is a first level outcome that can lead to the promotion, a second level outcome. Expectancy relates efforts to the first level outcomes. A person will work towards a target only if he believes he can do it. The Vroom’s theory helps in understanding where the problem lies but does not offer specific solutions. An analysis may be carried out using a questionnaire to discover where the employees face motivation problems and steps may be taken to remove such problems. Another problem that sales people often face is the need to project themselves as happy smiling people. The sales job is one that involves emotional labor.

Emotional labor that involves concealing true emotions can lead to emotional dissonance and low performance in work. Emotional dissonance can be overcome by deep acting (McShane 108). Deep acting involves changing true emotions to match the required emotions. Salespeople should be taught how to apply deep acting. Moreover, the manager can also minimize emotional dissonance by hiring people with a natural tendency to be positive, outgoing and smiling (McShane 108). According to the Control theory of motivation, a person who is given more work should also be given the control to complete the work. The sales person must be given the freedom and resources to achieve his target.

The manager must understand that every individual salesperson is likely to have unique needs. He must be given positive reinforcements and once financial security is met, the manager must appeal to his other needs. If time restraints make it impossible for the sales manager to learn and respond to the needs of each salesperson, then he can study the sales force in segments. The salespersons must be explained the job requirements and expectations.

The salespeople must be trained to be professionals and incentives given so that they want to do their best. The rewards should be simple, immediate, frequent and related to the target. It must be recognized that four important aspects of successful salespeople are: positive attitude, personal goals, time organization and enthusiasm.

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Each salesperson should be helped to set reasonable goals and design plans to attain those goals, and provided feedback. Their positions should be challenging, have some authority, and provide some freedom (Kulkarni 1). It must be ensured that they are satisfied in their jobs through a fair basic compensation plan, helpful and constructive supervision, acceptable fringe benefits, and job security. The manager must take an active role in developing the motivational processes and also provide a participative environment to give them some control over the environment. The manager must communicate and maintain an open, constructive, and relaxed environment with the salespeople and know their problems.

Once the desired level of income has been reached, salespeople typically strive to satisfy such needs as status, prestige, recognition, the need to win, and opportunity to serve, and the respect and affection of management and peers (Kulkarni 1). Three facets of non monetary motivation are recognition, awards and special communications. The latter includes newsletters, articles or news features about special efforts made, pictures of the top salespeople, spot for award recognition and individual letters/special telephone calls.

Motivation is a critical responsibility of the sales manager and he must be the person to understand that there are many different ways to motivate the sales force rather than sticking on to incentive program alone.

Works Cited

Green, B. Thad and Butkus, T. Raymond (1999). Motivation, Beliefs and Organizational Transformation. Quorum Books. Westport, CT.

Hobert, D. Robert (2008). How Non-Financial Incentive Programs Reinforce Behavior. Web.

Kulkarni, Sameer (2008). What is Sales Management? Introduction to Personal selling. Web.

Luthans, Fred (2005). Organizational Behavior. Tenth Edition. McGraw-Hill Publishers. New York.

McShane, L. Steven (2006). Canadian Organizational Behavior. Sixth Edition. McGraw-Hill Higher Education.

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