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Does your sales bonus scheme still work in challenging times?





Posted by Sarah Lardner on 21 April 2020

Does your sales bonus scheme still work in challenging times?

HR Reward | Reward Consultancy | Bonus | Performance Related Pay | Motivation | Sales Bonus | Covid-19

Unless you are impacted directly, the Covid-19 effect on our ‘sales force’ nationwide hasn’t had quite the same level of visibility as the impact on key workers or the self employed.

For businesses that have some form of business development role, the outbreak of Covid-19 has highlighted the hidden impact on earnings potential, and some clients are having to find ways to redeploy their key salespeople, as they have seen their day job - and earning potential - drop off literally overnight.

Many organisations are furloughing individuals in these roles, and whilst the salary retention will be welcomed, it would not come close to protecting individual total cash earnings. Alternatively, they are being deployed into operations functions, for example to assist with warehouse activities or on the phones dealing with customer enquiries.

Whilst some organisations are protecting the earning potential of their sales staff where they can, unfortunately some are not able to do so and therefore those employees will see their total earnings diminish. On the other hand, a great deal of companies are finding themselves stuck paying out bonuses without the results because of the construct and rules of the schemes.

It is critical that the design of a sales incentive or commission plan considers not just the payment, but the construct and purpose. What has become more clear within the current Covid-19 situation is that scheme rules and mechanics need to be agile; they need to be able to flex or have the capacity for another scheme or feature to be bolted on to drive a change in behaviours, a change in sales approach or a change in product/services. 

If it is too rigid, an employee cannot or will not be as agile.  It’s about being able to change direction and pull different levers to get the desired results. 

To put this into context, I can share a personal example. Right at the start of the financial crisis in 2008 I was part of a team looking after pay and bonus for a Building Society branch network.

Overnight, we moved from Business as Usual to Business Contingency with the collapse of Northern Rock. Our objective was simple - to retain customers’ deposits. It was a difficult balance to strike as we also needed to keep our eye on the ball in terms of the day-to-day activity. 

Therefore, the BAU bonus schemes still operated and a customer deposit retention incentive was created to overlay it.  The intention was that it would be a short-term incentive arrangement, to bring all of the branch network together in doing what was right for its customers and right for the Building Society. This was done through the design, and communicated well, creating excitement and encouraging healthy competition between branches, areas and regions.  

In my experience, this is easier to do when BAU schemes are: designed well; consistent; managed centrally; and have a clear purpose. 

Often, when schemes are designed locally, they become overly complex, will pay out regardless of results, are designed around individuals and focused on the immediate functional requirements, losing sight of business goals and tend to inhibit market and economic responsiveness. 

There is likely to be a need right now to revisit and adapt some bonus and incentive schemes to either help re-focus effort to what is important to the business right now and in the future (because post Covid-19 will look different); or to temporarily pause, so that it is not paying out unnecessarily and to get ready for ‘lift off’ when we get on the right side of Covid-19.

If you recognise these issues and feel that your schemes will benefit from an audit, then please do get in touch - we would be happy to bring in our experience. You can contact me directly at, or call us on +44 (0)20 3457 0894. 

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