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.

Accelerators can be a great motivator for a commissioned sales person. An accelerator is an increase in the commission rate once a sales person reaches a designated level of performance. The theory being the organization can afford an increase in commission rate at a point when additional sales are very profitable. An accelerator will drive a focused sales person to take his or her performance up a level where the rewards are greater.

However, there is also the issue of windfalls. Most organizations want to protect themselves from paying excessive commissions to an individual who achieved extraordinary sales growth based on an external activity that cannot be attributed to their personal efforts. That is where the decelerator comes in, which is a decrease in commission rate. In these cases consider using an accelerator for performance significantly above targeted levels, perhaps a number like 125%(i.e. 25% increase over the goal), but use a decelerator for commission rates once the sales person reaches 150% of their target.

An accelerator combined with a decelerator can be an effective design tool for organizations seeking to reward star performers while protecting the organization against paying out excessive commissions.

Insights on Incentives is brought to you by NSS Corp.