Employee rewards lead to higher revenues

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By: Wise Marketer Staff |

Posted on April 13, 2012

Companies that implement non-cash reward and recognition programmes for their employees have been reporting annual revenue increases averaging 9.6%, compared to an average of only 3.0% for all other companies, according to research from Aberdeen Group and the Incentive Research Foundation (IRF).

The study report, entitled Sales Performance Management 2012', highlighted the importance of rewards and recognition as a vital component of employee compensation and noted the competitive advantages that companies gain by outsourcing the design and implementation of such programmes.

The study examined best-in-class trends for sales force compensation, finding that top-performing companies are twice as likely to use an external partner when designing and implementing such programmes. The study found that the top 20% of companies (the 'best-in-class') had the following profile:

  • 83% of Best-in-class companies' sales reps achieved annual quota in the last year compared with 51% of Industry Average firms and 22% of laggard companies.
  • Best-in-class companies had 23.1% average year over year growth in corporate revenue versus 7.2% for Industry Average firms and a decline of 5.9% for Laggards.
  • Best-in-class companies had 9.7% average year over year improvement in average deal size, compared with 1.9% for Industry Average companies and a .4% decline for Laggards.

"Interestingly, the study also demonstrated that the size of the organisation isn't a significant factor, but that corporate senior leadership buy-in is a key ingredient for success," said IRF president, Melissa Van Dyke.

In fact, the study suggests that organisations that implement non-cash reward and recognition programmes tend to outperform other organisations in several major business indicators, and not just in terms of revenue growth.

According to IRF chief research officer, Rodger Stotz, "Perhaps the greatest lesson to be learned from this study is that professional sales staff tend to respond to measurable rewards and recognition much like other employees, so it's not surprising to find that companies using such programmes post better sales results."

The paper has been made available for free download from the IRF's web site - click here (PDF document; no registration required).

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