So, you’re putting together a sales incentive or employee recognition program that will be based on specific targets and objectives. You have your key performance indicators (KPIs) for each audience and you’ve allocated reward funding based on the incremental gains your company is hoping for.
But in looking over the plan document you are not sure about something. What weight (if any) should you apply to employee behaviors that will lead to those results now and in the future? In addition to rewarding performance within the program’s eligibility date, should you also be reinforcing other positive behaviors that will set the stage for stellar results down the road?
The answer is yes. In fact, it would be shortsighted not to. Effective employee incentives and/or sales contests do both. They drive the results and the behaviors your business needs to move forward. The solution for structuring a program that rewards outcomes while also setting the seeds for future success lies in understanding how leading and lagging indicators work and having the technology to apply them effectively.
Lagging indicators are results. Leading indicators are activities.
Linking all facets of your compensation mix, including your incentive and recognition programs to the business’s overall strategy is a best practice. To do so, you need to clearly communicate the direction of the organization and then clarify how employees can get you there. Lagging and leading indicators can help here. Using both within your program helps to define (and then focus employees on) the types of results and behaviors that move the organization forward.
So what’s the difference between the two? Lagging indicators are outcomes. They reflect results that occur during the program period. Within sales incentive programs they might include things like increases in revenue or jumps in market share. With the right technology you can be pretty specific here. For example, you can call for sales increases but do so across individual territories or product lines.
On the employee recognition side, a lagging indicator also ties back to a metric. Here you might incent things like increases in productivity, reductions in accidents or gains in customer satisfaction.
For the purposes of incentive planning, a leading indicator is an activity (or a group of activities) that precedes success. They encompass the different actions that eventually lead to an employee’s or sales rep’s broader accomplishments. They can be observed by managers and peers or they can be tracked through normal workflow administration tools.
For sales professionals, that can mean account planning activities like identifying key decision makers, creating proactive proposals or preparing subject matter experts before a big pitch. On the employee side they could mean gaining a new skill-set certification, volunteering to work on a project or mentoring a co-worker.
“Lagging” measures reward performances achieved while “leading” indicators identify and recognize actions that lead to bigger successes down the road. Programs that use a combination of the two get the best results. Those that have the built-in flexibility to apply one versus the other across different audience segments (depending on their current and past performance baselines) give their sponsors optimal returns.
Whatever combination of indicators is called for within your program, you will need a recognition and sales incentive solution that’s configurable enough to accommodate them. With Maestro, you can set and reset goals easily across the entire employee population. Its configurable nature allows you to construct sales incentive or employee recognition initiatives that focus employees, salespeople and channel partners on the specific outcomes and types of behaviors that help propel the organization forward.