A Word from the Rymax Marketing Sales Team
When it comes to driving employee motivation, especially for sales employees, many employers fall short by believing the misconception that money is the most effective reward. Rewarding actions with cash can be highly jeopardizing to a company’s long-term performance as it does not sufficiently motivate and engage sales employees. Assistant Professor, Doug J. Chung and Business Administration Professor, Das Narayandas from Harvard Business School recently conducted an experimental study with a consumer goods business in India to discover if it is more efficient to recognize and motivate sales teams with cash bonuses or tangible incentives.
Chung and Narayandas worked with the India-based company for six months, testing a multitude of reward options and delivery methods in their different sales departments from four major branches. While some tests were more successful than others, the general consensus was that sales employees are intrigued with money bonuses, but find cash to be exchangeable, offering no long-term value or engagement. Out of the 80 employees studied, a majority stated that a bonus reward is somewhat expected after meeting a quota and if it does not materialize, they feel discouraged. Money bonuses also do not impress them, nor motivate them further.
The study also found that the delivery of the reward is equally as important as granting recognition. The company saw a 20 percent increase in sales when the bonus was directly affiliated with a salesperson reaching their quota. That percent dropped substantially if the reward was granted with no strings attached, leading the employee to assume they were being recognized for something done in the past, rather than a recent action.
Rymax Marketing Services believes in the power of recognition and aspirational rewards to drive employee motivation and engagement. Our success in creating merchandise-based loyalty programs proves Chung and Narayandes findings- that tangible rewards hold higher value to employees than cash. Paul Gordon, Rymax’s Senior VP of Sales feels, “recognition is the initial driver and the reward is the trophy value that sustains the good will and accomplishment. For example, give an employee $500 and ask them in two years what they did with it. They’ll be hard-pressed to tell you exactly what they spent it on, but give them a $500 watch from Citizen Timepieces or Swarovski and as long as it is on their wrist, they’ll tell you exactly how they received it, what they did to earn it and who gave it to them. That is truly powerful recognition.”
At Rymax, we incentivize our sales team in order to consistently motivate them to reach specific goals. We encourage employees to perform daily tasks with effort and diligence and reward them for positive actions. Lori Baron, Casino Sales Support Manager at Rymax, finds merchandise to be highly effective in motivating her to sell; stating, “It is nice to know that I can strive for something that is actually attainable and not something I would normally “buy” for myself. Receiving something more physical and lasting than money reminds me of my hard work more frequently and it is something to be proud of.”
Recognizing sales employees with tangible merchandise enhances their desire to be rewarded by the company for their efforts; ultimately driving them to work harder. Rebecca Walker, Rymax’s Sales Support Coordinator states, “The reaffirmation, by both the client and my employer, of a job well done helps motivate business to the next level. Receiving a trending product, like the new Michael Kors tote or a pair of Ray Ban sunglasses, right after I accomplish a goal gives me immediate satisfaction. The fact that I can obtain merchandise I want without having to break into my paycheck, makes me work harder everyday.”
Incentives and desirable rewards are meaningful motivators that offer long-term gratification and encouragement. While cash can be easily spent, a tangible product is a physical reminder of your employee’s dedication, hard work and achievements. Employers should be looking to merchandise, rather than cash bonuses for lasting motivation that drives sales and performance. Taking your business to the next level starts with an incentive program that truly recognizes employee achievements and encourages positive performance.