Incentive Compensation | Sales Commission

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Incentive Compensation | Sales Commission

How important is getting recognized for the work you do?

Well, there is only one answer to this question: Very much. 

In a study conducted by Deolittle, “25% of employees wanted to be recognized for the effort they put in and not just the big wins.”

This shows how much employee appreciation and validation can contribute to the enhancement of performance and productivity.

The aim of a broad-based compensation approach is also to fulfill these employee recognition efforts but not constrain rewards and recognitions to any one team but to all employees. 

In this article, we will explore more about broad-based compensation definition, its benefits, and strategies for its effective implementation. 

So scroll down for me. 

What is broad-based Compensation?

The broad-based compensation plan offers incentives to nearly all employees based on their performance. When all employees of the organization receive recognition in various forms of rewards it will holistically enhance the company culture and improve the growth potential. 

By acknowledging employee efforts and contributions, broad-based compensation creates a work culture where employees feel appreciated and part of the organization.

These ways of recognition will thereby ensure that there is enhanced employee engagement, performance, and motivation to work toward fulfilling the company objectives, ultimately driving employees to achieve their on-target earnings.

The Benefits of Adopting a Broad-Based Compensation Approach

Certainly, a workspace that celebrates its employees will be returned with commitment, dedication, and loyalty. 

So here are a few benefits of adopting a broad-based compensation structure to your company operations.

  • Appreciating Employee Efforts 

Every employee expects appreciation from their managers and organization. Receiving recognition and rewards, such as MBO compensation, will give employees the validation that their efforts play a huge part in the company's success. Employee motivation is a decisive factor in the overall growth and progress of any organization.

  • Building a Sense of Belonging 

Only when an employee feels they are a part of the organization will they be driven to fulfill their responsibilities with commitment, initiate newer ideas for better growth, and participate in every organizational initiative. Recognitions help employees celebrate company success as the success of their efforts. 

  • Ensuring Employee Engagement 

Organizational work culture changes when employees voluntarily come up with innovative ideas and take up initiatives aimed at improving the company's growth. Incentives have a crucial part in creating such a healthy and motivated work environment. 

  • Creating a Holistic Competitive Environment 

Broad-based compensation rewards employees based on their performance, including incentives such as non-recoverable draws, to motivate employees to achieve their individual goals, improve their performance, and contribute to a healthy and competitive work ambiance, which plays an important part in holistic business development.

The benefits that incentive tools offer in improving employee performance and company growth show the importance it has in boosting business operations. 

For further read on benefits of incentive compensation, check Maximizing Productivity: Benefits of Employee Incentive Programs

Strategies for Effective Implementation of Broad-Based Compensation Approach

Broad-based compensation has proved its relevance in enhancing employee engagement and company growth. This calls for a strategic way of effectively implementing the approach in your business operations.

  • Understand Employee Needs 

The effectiveness of a tool is determined when it caters to the needs of the beneficiaries and brings the desired results it was intended for. Therefore, organizations must first understand their employee needs before designing their compensation plan. 

  • Design Key Performance Indicator

The effectiveness of a tool is determined when it caters to the needs of the beneficiaries and brings the desired results it was intended for. Therefore, organizations must first understand their employee needs before designing their compensation plan, ensuring that it aligns with target compensation goals and objectives.

  • Design Effective Incentive Program

Organizations must be clear about the purpose of their incentive program and the resources available to reward the employees. Timely paying the promised incentives without any calculation errors is a small but decisive part of ensuring the effectiveness of your incentive program. 

  • Evaluate Incentive Effectiveness 

The beneficiaries of your incentive program are the accurate indicators of the effectiveness of your incentive program. The improvement in their performance and their satisfaction with their work reflect the improvement the incentive program has brought. Based on such improvements and asking for regular feedback, organizations must evaluate the effectiveness of their incentive program regularly. 

Hence, the effectiveness of a broad-based compensation approach is determined by the intense groundwork done in building the program and the regular evaluation and revamping to make it better. 

To know more about building an effective compensation plan, refer Understanding the Basics of Sales Incentive Compensation


Incentive compensation has always been an effective tool in keeping the salesforce motivated and ensuring their high performance. 

When such a powerful tool is made effective among all employees then it is sure to bring in a holistic and comprehensive improvement in the overall business operations. 

Broad-based compensation hence can enhance employee motivation, performance, and engagement while building a work culture where everyone feels appreciated and belongs. 

But calculating incentives for your entire team can become a tedious task! The easy solution to making compensation calculators error-free, seamless, and easy is through automation.  

Kennect builds, runs, and automates your incentive compensation plans to create transparency and achieve operational efficiency. For more information, Book A Demo today!

How Your Company Can Implement Broad-Based Compensation

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