Getting Sales Incentive Compensation Right
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NBTC: Getting Sales Incentive Compensation right
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Getting Sales Incentive Compensation Right
- 1. NBTC: GETTING SALES INCENTIVE COMPENSATION RIGHT Salubi Raymond 8/05/2014
- 2. Overview • T Mac was ‘repatriated’ by NBTC in late 2006 to ‘capture the retail banking market within three years’ • In an attempt to make the CBG profitable, he set the DSA model • The DSA was aimed at increasing revenue by 25% while reducing OPEX by 30%
- 3. Overview • CBG Division’s 2008 third quarter business report reached the head of division T- Mac . • Year-to-date revenues had reached N20 billion (about US$135 million), narrowly exceeding the 'stretch target' set for the entire year. • About 75 percent of the division's phenomenal growth was accounted for by the DSA (Direct Sales Agents) model introduced in early 2007.
- 4. Strategic Imperatives Cost Increase in profit Margin Quality bank’s premium brand & customer service Quality Commitment High performance
- 6. Rational Choices Since there is no right way to manage human resources, the focus should be on the best fit and alignment with the Organizational strategy
- 7. Rational Choices Resourcing 125 core sales force Focused on selling regular & newly developed products to existing customers Base pay of N 160K Had other benefits Hired on a renewable contract basis tied to performance Mandated to aggressively grow the market by selling to new customers 25K base pay+ commissions tied to performance No other benefits Core Staffs DSAs
- 8. Rational Choices Contingent employees were used Employment security wasn’t guaranteed
- 9. Rational Choices • Lag the market • Raises were based on performance • Long term tenure wasn’t rewareded • Large differentials between employees Compensation
- 10. Issues Spiraling incentive compensation costs, Increasing attrition of the DSA team Imprudent and highly inappropriate practices perpetuated by some DSAs, Unhealthy rivalry between the core sales team and DSAs, Poor customer service satisfaction survey ratings
- 11. Problem Misalignment between the incentive system and the objective of the business The DSA model Both
- 12. Solution the challenge here is to fix the ‘broken’ incentive system without breaking the DSA model
- 13. Recommendations • Purpose/Objectives has to shine through loud and clear and be the driver ( Strategy) • Use motivation and non financial incentives • Use multiple layers of reward • Increase employee involvement
- 14. Conclusion
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