Pay is most critical for employee engagement

Usually described as a 'hygiene' factor of little consequence to employee engagement, pay moved up in engagement driver ranking from No.6 in 2011 to No.3 in 2012, according to Aon Hewitt survey on trends in global employee engagement .The positive perception scores of pay improved 2 percentage points from 2011. However, career opportunities remains at the top engagement driver ranking position - followed by organisation reputation, pay, recognition and communication. Pay showed up as a top driver in Asia Pacific and Latin America, both are growing regions, where the job market is competitive and pay remains a critical aspect of the value proposition to engage talent.

According to the survey, pay's new ranking as an engagement driver has significant implications. First, it could mean the pay freezes and bonus impacts of the last few years have started to meet the 'hygiene threshold,' and pay is factoring into employee engagement more and more. It could also mean the employment contract is changing as has been predicted, and employees with less long-term loyalty value pay more and more.

Making incentive practices work in a long sales cycle
To make incentives work within a long sales cycle, organisation must understand the lifecycle of the company, product demand and industry, says a Hay Group report on enterprise sales effectiveness. For example, start-ups may have longer sales times that transition into more frequent sales with maturity or brand recognition. A longer sales cycle is defined as a sale that takes more than six months to close with the customer.

The report says the use of a bonus or goal-based plan is more common than a commission plan in organisations having longer sales process. This is because there may be more unpredictability with earning commissions and the velocity of sales is likely to be lower over the year. The compensation structure should also be reviewed as there tends to be a higher mix of base pay and less leverage. The typical pay mix for a sales rep with a shorter sales cycle may be 50/50; however with the increased sales time, the report suggests pay mix is more reflective of 75/25.

The report recommends less leveraged compensation plan for these types of sales reps to support the lag in payoff between sales. Sales plans should be reviewed annually and adjusted as needed. A clear handoff must be developed between managing existing accounts once a contract is signed and hunting for new business.