Upload
salubi-raymond
View
146
Download
9
Embed Size (px)
DESCRIPTION
NBTC: Getting Sales Incentive Compensation right
Citation preview
NBTC: GETTING SALES INCENTIVE
COMPENSATION RIGHT
Salubi Raymond8/05/2014
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%
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.
Strategic ImperativesCost
Increase in profit Margin Quality
bank’s premium brand & customer service Quality
Commitment High performance
Institutional Constraints
Rational ChoicesSince there is no right way to
manage human resources, the focus should be on the best fit and alignment with the Organizational strategy
Rational Choices
Resourcing
125 core sales forceFocused on selling
regular & newly developed products
to existing customers
Base pay of N 160KHad other benefits
Hired on a renewable contract basis tied to
performanceMandated to
aggressively grow the market by selling
to new customers25K base pay+
commissions tied to performance
No other benefits
Core Staffs DSAs
Rational Choices Contingent employees were used
Employment security wasn’t guaranteed
Rational Choices
• Lag the market• Raises were based on performance• Long term tenure wasn’t rewareded• Large differentials between
employees
Compensation
IssuesSpiraling 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
Problem
Misalignment between the incentive system and the objective of the business
The DSA model
Both
Solutionthe challenge here is to fix the ‘broken’ incentive system without breaking the DSA model
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
Conclusion