With the recent Wells Fargo case in the headlines, it’s a good time to review the right reasons to use Sales Incentives. These are powerful tools to help organizations reach their goals. For a business to thrive, company goals should be aligned with what’s good for the consumer.
A poorly designed program will drive people to do the wrong thing for personal gain. As Nick Clements, writes in his Forbes
article, “The Wells Fargo Reminder: Incentives Can Be Dangerous
Bank management blamed the fraud on “people trying to meet minimum goals to hang onto their job.” Opening fake accounts was never in the interest of Wells Fargo. The company will have lost money on dormant accounts. It will have paid incentives for un-profitable accounts and lost consumer trust. And now it is facing a significant loss of shareholder value along with regulatory fines. The success of meeting short-term sales goals is now being overwhelmed by the costs of this scandal.
Wells Fargo made the mistake of creating a punitive environment if goals weren’t met, and putting priority on sales volume over both quality and doing what’s right for the customer. By driving employees to sell at all costs, trust was broken and it became easier to act fraudulently than to risk failing against unattainable quotas.
It doesn’t have to be this way and, in fact, is not the case with incentives at most financial institutions. It has been our experience that our clients focus sales incentives on sustainably growing the business and gaining market share by being the provider of choice.
One of our Midwestern banking clients ran a campaign called Do the Right Thing, which emphasized growing the business by making smart recommendations to customers and solidifying perception of the bank as a good partner to its customers.
Other clients have based their incentive programs on building relationships, over selling one product or another. If your incentive program is all about what you want to sell, instead of what your customers need and want, you’re failing to be a trusted and trustworthy partner.
Here are a few key rules to keep incentives on the right track:
- Goals must be achievable – This is an incentive fundamental. There’s nothing wrong with stretch goals, but goals that are unattainable lead to two outcomes: people give up or they’ll go to any lengths to hit them. Neither will give the intended result.
- Begin with the end in mind – I’m sure Wells Fargo did not intend to drive its employees to act fraudulently or to break their trust with consumers. If the goal is to build business by encouraging customers to use more products, then what’s right for the consumer has to be factored into the plan. Volume goals have to be tempered by goals around customer satisfaction and relationship management.
- Don’t confuse compensation with rewards – Non-cash rewards are aspirational and personal. They speak to ambition and hopes and dreams. Cash rewards for incentives are quickly confused with compensation and become essential to just pay the bills each month. Keep the focus on aspiration to help keep priorities straight.
- Senior leaders and managers are the guardians of your culture - Company leaders must deliver the message that – yes – objectives are important, but they also must understand that being a good corporate citizen means doing the right thing for customers, not just taking whatever you can get. If front line managers give the impression that hitting targets is all that matters, that’s just what they’ll get – at the expense of everything else needed for a successful business. That’s what happened at Wells Fargo. According to a 2013 LA Times article, supervisors were also feeling the pressure to perform, no matter what.
- Keep your company values front and center – Wells Fargo’s first company value is "Our product is service.” A customer-centric, relationship-driven incentive would have inspired Wells Fargo employees to find the right solutions for their clients, rather than push a set of unneeded products. As one banker wrote of her experience at Wells Fargo, “There was no incentive to provide good service, only more service.”
- Program owner must monitor results - It's important to refine the program over time and to put controls in place to protect the company and the customer from fraudulent behavior. Check results and ask questions.
- Work with incentive and recognition professionals – We at Next Level Performance and our peers in the industry dedicate our lives to getting recognition and incentives right. We understand the potential pitfalls and can help you design a program that’s right for your company – culturally, and in terms of your customers and your sales. Investment in performance improvement is important and the outcomes should have a net benefit to your organization and your customers.
Your program should be able to be featured on the front page of the Wall Street Journal
because it's grounded in the right reasons to use sales incentives. Incentives are a proven business strategy to focus employees on the right actions. They should inspire people to do great things, not to win at all costs. The Wells Fargo situation provides an opportunity to review your sales incentive programs, with a broad view of business outcomes in mind. With a well-designed program, you can balance your organization's needs, with the needs of your customers and your employees.