How to Improve Employee Satisfaction and Drive More Revenue With Incentives

According to a survey from business consulting firm Robert Half, a whopping 91% of managers said one of their top concerns this year is retaining top talent. And, as an extension, 88% said keeping teams motivated and engaged is what keeps them up at night. 

These concerns are aptly placed: U.S. employee engagement fell from 48% to 44% between 2022 and 2023, and Forrester predicts it will fall to 39% in 2024. 

Yet, employee engagement is important for businesses and individuals alike. By improving satisfaction, companies are able to increase productivity and efficiency. 33% of employees say they’re more likely to stay at their company and go above and beyond when they feel enthused — and those employees contribute 15% more than non-engaged ones. 

How can companies effectively improve engagement and grow their bottom line in the process? 

Enter: incentive-based compensation.

Pay-for-performance programs provide crucial financial motivation if implemented strategically, accounting for transparency as well as opportunities for recognition and coaching. More and more compensation professionals and Go-to-Market (GTM) leaders are leveraging incentive compensation as a lever to both increase employee productivity – in sales and beyond – and reach lofty company goals. Here’s how.

Provide Clarity Around Employee Objectives & How They Tie to Business Strategies 

Setting clear objectives and effectively communicating those goals to employees can boost their motivation and productivity at work – in fact, 37% of employed U.S.-based adults said that greater visibility of company and individual goals would spur their performance. Further, employees who set goals are 14.2 times more likely to be inspired at work, and are 3.6 times more likely to be committed to their organization. 

Despite these benefits, however, less than one-third of those surveyed said their manager did not establish challenging-but-attainable goals for them.

Incentive-based pay is an effective tool for establishing concrete goals for each employee that directly tie to business objectives, communicating and providing visibility into those targets, and measuring the results or effort against them. By leveraging incentives, employees understand the specific objectives for their role and what they need to do in order to achieve them. 

Speaking on this topic with global think tank The Conference Board, CIQ Chief Marketing Officer Katie Foote explained that “employers need to be clear on what’s expected of individuals in order to foster engagement and excitement.”

Alexander Group’s Matt Bartels recently spoke with us on the topic as well:

[BLOCKQUOTE
| Quote: After studying the principles of enduring leadership over a 20 year period, one of the things successful companies got right was strategic talent architecture. Enduring leaders had specific competencies that they were measuring – and then articulating – on what good looks like. Sellers, for example, seek clarity on customer segments, their participation in the sales process, their collaborators throughout the process, the products or services they need to represent, and the executional strategy.
| Author: Matt Bartels
| Title: Principal, Alexander Group
]

Ensure Employee Impact on Company Objectives

Not only do clear expectations improve the employee experience, they also make sure that incentives set the company up for success. Your compensation model should be optimized according to the organization’s operations, goals, and culture, and a well-developed pay-for-performance program produces a symbiotic relationship where businesses reach their goals and employees feel valued for their contributions.

In fact, highly-aligned organizations working toward the same objectives and sharing the same company mission are 72% more profitable – and they grow revenue 58% faster than their unaligned peers.

However, only 22% of U.S. employees strongly agree that their company's leaders have a clear direction for their organization, while a mere 14% of organizations report that their employees have a good understanding of their company’s strategy and direction.

After clearly defining employee objectives that can influence business results, it’s then up to team and company leaders to communicate the connection between individual objectives and broader company goals. Foote shares, “That becomes your culture: the expectations,goals, vision, and values have to connect to every individual employee in an organization.”

Intentionally Motivate Desired Employee Behavior 

Incentive compensation plans help employers affect change by creating greater motivation for desired behavior. 

According to CaptivateIQ’s Compensation & Motivation Pulse Survey – which polled 1,000 commissionable U.S. employees across GTM functions – 57% said working for commissions or bonuses motivates them to do a better job at work and over half (52%) said it motivates them to hit their goals. In addition, 44% said it improves job satisfaction and 43% said it makes them feel more engaged at work.

Before you start encouraging certain behaviors, make sure you understand your corporate philosophy so you can accurately identify desired behavior and, thus, incentivize it. “It really starts with the corporate philosophy,” shares Bartels. “The first thing you have to do is understand guiding principles: are you focused on driving income, so you don’t pay sellers much for a base salary, and instead give them a ton of incentive? Are you focused on working relationships, and focused on everyone working collaboratively? Do you consider yourself an activity-based culture, where you prioritize execution excellence and expect the results to follow. Make sure you understand your corporate philosophy before you start jumping into program design.” 

From there, you can start identifying key outputs and building a system that encourages them. 

Boost Performance Through Collaboration & Competition

If you’re looking to increase partnership and participation amongst your team, incentives can help. In fact, group performance pay has been found to increase productivity by as much as 18% in some cases. 

[BLOCKQUOTE
| Quote: For our business development organization, we’ve been focused on fostering a culture of teamwork. So, 75% of the team member’s compensation and variable plan is tied to their own performance, and 25% is tied to how they do as a team.
| Author: Katie Foote
| Title: Chief Marketing Officer, CaptivateIQ
]

Another team-focused approach is building friendly competition into the environment by giving greater visibility to shared and individual goal progress to fuel results. 92% of employees, for example, said they'd work harder if their co-workers could see their goals. 

“We’re believers in a leaderboard,” continues Foote. “We believe that friendly competition – especially in selling organizations – can be very powerful. Another example is our year-long competition on the road to President’s Club, where our top sellers and GTM allies get to go on a special all-expenses-paid trip.”

Provide Feedback and Mentorship

Incentive-based pay programs are a great forcing function for providing routine feedback and mentorship to employees. For example, organizations can track an individual’s goal status by way of dashboards that highlight progress in real time and identify areas that need attention, giving managers hard data to inform and augment feedback in one-on-one meetings. 

And that feedback is incredibly valuable in motivating teams: 80% of employees who said they have received meaningful feedback in the past week are fully engaged. And, 85% of employees take more initiative when they receive professional feedback. 

[BLOCKQUOTE
| Quote: You need to be clear on what you expect of your employees to be engaged and excited. And the second piece is accountability – you have to be able to ensure that performance meets those expectations and that comes in the form of feedback, reviews, and, of course, incentives, compensation, and bonuses.
| Author: Katie Foote
| Title: Chief Marketing Officer, CaptivateIQ
]

Adjust Incentives to Map to Company Priorities 

Finally, leverage incentive programs to help communicate and operationalize any changes to company objectives or priorities. 66% of Alexander Group’s Sales Compensation Trends Survey respondents said they plan to change or recently have changed plans to better align pay to performance. This year, for example, 49% of sales compensation plans changed to be more profitability focused. 

Here’s the kicker: if plans are not directly tied to company objectives and priorities, employee trust and confidence quickly wanes. Naturally, company priorities may change over time, and it’s up to the GTM leadership to ensure the compensation plan is up-to-date with those objectives. 

Optimize Your Incentive Program to Retain Employees and Reach Company Objectives 

When set up effectively, incentive-based pay can have an incredible impact on employee satisfaction and motivation, plus company goals and objectives. Successful programs require significant upfront work: identifying company priorities, philosophies, executional strategies, and more. But, this extra diligence is well worth it to retain high-performing employees. 

Driving the point home, Bartels shared that he recognizes both the value and the responsibility that comes with incentive-based pay:

[BLOCKQUOTE
| Quote: When you implement an incentive program, you have to get it right. And getting it right means making sure employees understand how they’re getting paid, making sure that it’s aligned to the job roles, making sure they have visibility into the payments, and making sure they have the confidence that you’re going to deliver on your promises as an employer.
| Author: Matt Bartels
| Title: Principal, Alexander Group
]

We couldn’t have said it better ourselves.