Motivational moolah: What every financial services institution needs to know about sales and service incentive compensation.

• Author: Djokovich, Peter
• Position: Fundamentals

Competitive advantage in sales and service does not come from processes, products or CRM software. Competitive advantage comes from the workforce. While technologies enable business processes, and business processes enable employees, employees do the work and achieve the success.

The reality of customer relationship management (CRM) is that it is the company's employees, not the company, that actually "have" the relationship with customers. In banking, "people bank with bankers, not with banks." In restaurants "the food brings you in, the service brings you back." In health care, "bedside manner matters." In every industry and segment, successful "in-the-trenches" CRM is about people: your customers and your employees. CRM cannot succeed unless the organization's workforce is engaged, enabled and integrated into it. And, performance incentive compensation is a key element in making it happen.

Define your priorities, make a plan

Although it seems obvious that enterprises should have a business plan with goals, strategies, etc., most don't. The bottom line is that every consistently successful human endeavor has started with a plan. Written or not, plans are the basis for achievement and success.

Priorities-what the organization wants-are the foundation for the plans themselves. Priorities are manifested in the organization's goals, strategies, tactics, policies, procedures, manuals, measurement, compensation, training, coaching, internal communications and marketing. So, if priorities are vague or contradictory, plans will fail.

Therefore, it is critical to be sure of your priorities, and to be sure that you don't have conflicting priorities. Not doing so has serious consequences. In a large Midwest bank, the brokerage and trust departments independently implemented sales incentive plans, without any interdepartment coordination or higher-level oversight, and created an environment where 75 percent of all incentives paid were for portfolio dollars that trust and brokerage were pirating from each other's existing customer accounts. The results were a huge waste of incentive dollars, counterproductive internal competition, and lost credibility among confused and frustrated customers.

When priorities and plans are clear and noncontradictory, employees respond positively to the organization's specific performance expectations. To succeed, employees must know their specific goals, objectives, targets, budgets, strategies and action plans. They must also understand their related accountabilities and responsibilities.

Set goals

Setting goals also means ensuring that employees understand the business you're in: In other words...