Insights on Incentives has as its sole purpose the facilitation of thought and discussion on the subject of incentive compensation for banks and credit unions.  Once a month NSS will be sending out an e-mail with one insight on the area of incentive compensation.  The insights will come from our research, discussion with customers and finally, those of you who decide to offer an insight on this important sales management issue.

In the context of incentive compensation plan design, a gate is a goal or condition that must be achieved before incentives can be earned in another measurement area. One example is a customer satisfaction gate. Specifically, if surveys are in place measuring customer satisfaction then it would enable the establishment of a gate that could be, for example, attaining a customer satisfaction level of 90% before any incentives are earned on product sales. Now your incentive compensation plan not only recognizes sales gains but also, reinforces the point that increase sales cannot come at the expense of customer service.

Another potential gate, depending on your institution’s strategy, is cross-sell ratio. An example is a plan that does not pay any product sales commissions in a period that a cross-sell ratio of 2.5 (the actual number varies from institution to institution and also depends on the type of institution) is not achieved. Thus reinforcing the point that selling products should not be at the expense of building stronger relationships with your customers.

Consider using gates, also referred to as hurdles, in designing your plans...a powerful tool.

Insights on Incentives is brought to you by NSS Corp.