Sales Incentives and Targets: When the Bonus Rewards the Opposite of What You Ask For

Rewarding A while hoping for B#

In 1975, Steven Kerr published an article in the Academy of Management Journal that has since become a classic, "On the Folly of Rewarding A, While Hoping for B". His observation still holds: many organisations reward one behaviour while hoping for the opposite one, and are then surprised by the outcome.

The most common case is in sales. Management asks staff to advise customers, offer them the right product and not sell them what they do not need. At the same time, targets count contracts, variable pay depends on the number of products placed, and branch league tables are posted every month. Teams are not being cynical: they are reading the organisation's real message correctly, and that message is in the payslip.

This is why incentives are one of the five conditions for autonomy. No responsible-selling training survives for long against a target that contradicts it.

Where this happens in Morocco#

The mechanisms are familiar in every sector that sells to individuals with personal or branch targets.

None of these incentives is bad in itself. The risk arises when the paid measure becomes the only one that counts and no control checks what happens after the sale.

What complaints show, and what they do not#

Bank Al-Maghrib publishes every year, in its banking supervision report (opens in a new tab), the number and nature of the complaints it receives.

A rise in these complaints does not prove that mis-selling is taking place. It can also reflect greater awareness of how to complain or more accessible channels. Our analysis of banking complaints in Morocco sets out these caveats. The same reasoning applies to insurance complaints.

The useful lesson lies elsewhere: an organisation's own complaints are one of the best places to check its incentives. A complaint about the advice given, a product that was not understood or a disputed sign-up should be traced back to the channel, branch and period of sale. That is the link that root-cause complaint management makes possible.

The method in five steps#

1. Map what is actually rewarded#

Variable pay is only part of the system. List everything that signals to teams what matters: individual and branch targets, bonuses, competitions, posted league tables, promotion criteria, praise in meetings, and also what gets penalised. For each item, write down the behaviour it rewards in practice, then compare it with what management says it expects.

2. Test how the target can be gamed#

Two tests complement each other.

• The field test. Ask a few salespeople and managers, in a setting where they can speak freely: "How would you hit this target without serving the customer?" They know the answer better than anyone.
• The data test. Look for signals after the sale: cancellations and withdrawals in the first few weeks, sales bunched in the last days of the period, several products taken out by the same customer on the same day, products sold outside their target market, complaints about advice, wide gaps between salespeople in the same branch.

A signal is not proof of wrongdoing. It is a question to examine with the manager concerned.

3. Add quality thresholds and customer-harm controls#

A sale only counts towards the bonus if it clears certain thresholds: the product matches the customer's documented need, information was provided and understood, and there is no cancellation or upheld complaint within a defined period. Add a sample-based check of sales, carried out by someone who is not paid on those sales. Deferring part of the bonus until the end of that period is an option to explore with HR and a lawyer, in line with employment law.

4. Balance volume and quality#

A good scorecard combines a small number of measures: one for volume, one for sales quality and one for customer harm. Quality measures must carry enough weight to really count. If they make up only a token share of the bonus, teams will ignore them. Lead measures help track this balance every week rather than at year end.

5. Involve the people concerned#

A bonus scheme designed without salespeople will be worked around by them. Pilot the new scheme on a limited scope, explain what is changing and why, and set from the outset the date when it will be reviewed. Compliance is involved for regulated products; this is one of the levers of a compliance culture that does not rest on procedures alone.

Common mistakes#

• Using training to fix a bonus problem. Teams will remember the training for a week and the bonus all year.
• Adding a quality measure with no real weight. It becomes decorative.
• Multiplying measures. Beyond three or four, everyone picks the ones that suit them.
• Changing the rules mid-period. Trust in the whole system suffers.
• Ignoring non-financial recognition. A league table posted every Monday can weigh more than a bonus.
• Forgetting decision rights. If an adviser cannot turn down an unsuitable sale without being penalised, the rule stays on paper. See decision rights.

Measuring the effect of the change#

Before changing the scheme, record the baseline for a few indicators: early cancellations and withdrawals, complaints about the sale or the advice, the share of sales outside the target market, and customer retention at twelve months. Compare them at an agreed date, usually after one or two bonus cycles. Sales volume may fall when the change is made: the question is whether the remaining sales last longer and cost less in complaints.

Your checklist#

• A complete list of what is rewarded and penalised, beyond variable pay alone.
• For each target, a written answer to the question: how could it be hit without serving the customer?
• Post-sale signals, tracked by salesperson, branch and period.
• Complaints traced back to the channel and period of sale.
• Quality thresholds and a sample-based check carried out by someone independent of sales.
• Three or four measures at most, with real weight given to quality.
• A pilot on a limited scope, and a review date set in advance.