Recruitment, training, company relations management, change management and compensation: the practice of human resources is becoming more and more technical, and HR managers have an increasingly important role to play in strategic decision-making.
Alongside the constant need for new skills in the field of compensation policy, and incentive compensation more specifically, new training programs are emerging with a focus on the technical aspects of incentive compensation, but also on the various mechanisms at play in terms of motivational patterns and dynamics.
What are the essential theoretical and operational skills that HR staff need in order to achieve fluent understanding of an incentive compensation system? In this article, we’ll look at the importance of mastering incentive compensation schemes, which are key strategic factors in recruiting new staff and developing their loyalty.
HR AND INCENTIVE COMPENSATION: A LACK OF PRACTICAL KNOWLEDGE THAT CAN BE DAMAGING OVER TIME
A certain portion of HR professionals are flummoxed by the inherent complexity of incentive compensation schemes. As such, it’s not uncommon during interviews for certain recruiters to “oversell”, often unintentionally, the company’s incentive compensation scheme to the candidates they’re seeking to attract.
In order to motivate a candidate to join the company, certain HR staff will eagerly reference those sales reps who earn the highest level of incentive compensation and bring home the biggest bonuses, while only briefly mentioning (if at all) the target bonuses involved. Of course, convincing a newly hired candidate that they'll be able to earn the same bonuses as their highest-performing or most senior colleagues can lead to bitter disappointment.
During an interview, it would be difficult for any potential junior sales rep to fully appreciate all the minutiae of the incentive compensation scheme being offered. The candidate, to a certain extent, won’t want to contradict the recruiter and will go along with what they say, rather than trying to pick apart the conditions being put forward. On the other hand, a battle-hardened candidate who’s used to reading between the lines of incentive compensation schemes may ask the recruiter the right questions during the interview. In certain situations where the recruiter finds themselves unable to give precise technical details regarding the calculation of incentive compensation, they will naturally refer the candidate to a sales manager rather than attempt to answer themselves. In others, they’ll choose (whether intentionally or not) to remain vague in their answer, attempting to reassure the candidate that they’ll have the chance to pocket tidy sums, thereby casting themselves in a dishonest light without even realising it.
AN ESSENTIAL PARTNERSHIP WITH OPERATIONAL TEAMS IN ORDER TO UNDERSTAND THE SPECIFICITIES OF THE BONUS SYSTEM
Today, most recruitment processes follow an interview order, starting with a HR rep or recruiter, then an operational manager and/or commercial director. As it falls to HR to sort through the first batch of candidates, they are the first to explain the fixed pay and incentive compensation schemes that come with the job.
Next, the candidate meets with an operational manager, who’ll be able to go over the details of their incentive compensation scheme with them. As such, it’s important that the information given by HR staff matches up with the details provided by the manager.
In certain cases, candidates have arrived at the second interview thinking that their salary will be much higher than the real average earned by the team they’re preparing to join. It’s important to specify the reality of earning potential over the course of the first year, in order to avoid disappointing the candidate down the line - which could lead to them leaving the company during their trial period because they feel they were misled about their incentive compensation.
Moreover, incentive compensation schemes tend to be revised on a regular basis to reflect the company’s evolving strategy. That’s why it’s so important for HR staff to receive information about changes to incentive compensation schemes in real time.
THE UNDER-TAUGHT IMPORTANCE OF THE MOTIVATIONAL EFFECT
The concept of motivation has now become an essential driving force in modern companies with their focus on personal investment: entire seminars dedicated to rebuilding self-belief and the desire to surpass oneself are attended by employees seeking to boost their performance levels. Despite this, the various phenomena of motivation are very rarely taught in the French school system, nor in business and management schools or MA courses training future HR managers and sales directors.
In this context, the impact of compensation on motivation is often mentioned in passing but rarely placed under the microscope, despite being so crucial to staff performance levels.
Both HR and managers are aware of the importance of the motivational effect, but lack sufficient fluency in the various factors that can motivate their teams most effectively. It’s also true that the motivational phenomenon is a particularly complex one, and carries particular importance in our understanding of the mechanisms of incentive compensation.
One of the most visible effects of motivation is behavioural modification, which is what incentive compensation helps to bring about.
WHAT’S THE BEST WAY TO PROVIDE HR-SPECIFIC TRAINING IN INCENTIVE COMPENSATION?
It’s essential to provide adequate training for HR staff so they can become familiar with the various intrinsic and extrinsic motivational factors that prompt employees to act. But what’s the best way to analyse these factors, and offer incentive compensation schemes that are effective and genuinely help to motivate staff?
To help you mobilise your employees, Primeum offers specialised training schemes in the management of incentive compensation schemes based on your specific needs. As such, our teams have created a module specifically designed for HR managers, focusing on the management of evolving incentive compensation schemes over time.
This module is aimed at the various HR staff members who may be involved in the design and/or management of incentive compensation schemes. This 7-hour training course is based around a program whose aim is to develop three skill sets required by HR staff in the management of incentive compensation schemes:
- methodology for leading a project to modify and develop incentive compensation plans
- the fundamental and primary resources of this managerial tool for understanding the process of motivating staff through incentive compensation
