Hauke Tallon, Managing Director, The London School of English

Hauke Tallon, Managing Director, The London School of English

Reward for results: how effective are incentive schemes?

Incentive schemes can be: motivating, rewarding and inclusive, but also de-motivating, unfair and divisive. So why bother?

A starting point is to differentiate between incentives vs. increments. Increments will take into account length of service, experience or qualifications, whereas incentives focus primarily on performance.

Who currently benefits from incentive schemes?

Research carried out with 45 IALC schools suggests that increments for teaching staff are fairly common and can include payments special responsibility or specialist courses, qualifications and teaching experience. Increments for non-teaching staff are very limited and primarily related to length of service.

Incentives for sales and marketing staff are often based on measures such as revenue compared with the previous year or on student weeks based on previous year. Non-sales and marketing staff are given very few incentives, though they do exist.

Broadly speaking, teaching staff will get increments while sales focused staff get incentives – and in many schools everyone gets a share of the profit.  The most common mechanisms for making profit share payments include a flat payment for all staff, or a payment as a percentage of salary – the latter sometimes expressed as an additional payment representing x weeks of salary.

How effective are incentive schemes?

The fact that only half the respondents answered this question might suggest that the real answer is ‘not very’:

Only 1 out of 45 respondents in the survey rewards teachers for good feedback scores even though more held the view that trainers have more control over the effectiveness of what they do than most other roles, and managers know how their teachers are rated by their clients, so it can be monitored. Nevertheless, there are factors at play which make such rewards quite contentious.

Reward for sales performance are more common, though in practice, staff may have limited control over sales, with performance often heavily – though of course not entirely – influenced by political or economic factors which may well be outside an individual’s control. Nevertheless, most schemes are based on individual performance – less than 10% of total respondents base their rewards on team performance.

There is perhaps some irony in the fact that effectiveness is not rewarded for teachers where it can be monitored, whereas measuring sales is arguably more difficult, except, perhaps, for the ‘big players’ who have large sales teams and more reliable mechanisms for monitoring.

What are the alternatives for rewarding sales success? Suggestions include reward schemes for success in tenders or special projects, success in exploiting new markets or finding new partners or even up-selling or selling more profitable programmes. But to avoid the pitfalls, the organisation will need to train staff to avoid the risk of inappropriate partnerships or making flawed recommendations to clients.

Are reward schemes just plain wrong?

9 of the 45 respondents consider there is no need to use incentive schemes if salaries are fair, maintaining that all staff are working for the good of the school, so either “reward all or reward none”. In discussions around the subject, it seems that many apply reward schemes simply because they have existed for such a long time and it can be difficult remove them, even if they are not considered to be particularly effective.

Based on the responses to this survey, one reasonable conclusion is that very often incentive schemes don’t work. The main difficulty for smaller organisations lies in measuring staff effectiveness and rewarding it fairly. But it is possible that with new platforms such as Salesforce, smaller organisations may actually begin to measure performance more accurately and may be able to implement incentive schemes that are neither de-motivating, unfair nor divisive. Yet they may remain unpopular as, perhaps in our industry more than in many others, we often seek to strike the delicate balance between being both commercially and pedagogically strong – factors which are not always complementary. This does seem to have a strong influence on the range and popularity of incentive schemes – at least within the IALC membership who responded to the survey. It may be that conducting such a survey across the broader industry to include some of he bigger groups might have produced some different – and very interesting – results.

 

Seminar run by Hauke Tallon at the IALC 2014 Brisbane Workshop.

Hauke Tallon is the Managing Director of The London School of English. He has spent 11 years at the school – nine as their Director of Sales & Marketing and the last two as MD.  24 years ago Hauke was a TEFL teacher in Japan, but spent the intervening years in commercial roles in the retail and manufacturing industries.

About this blog

Members of IALC share their insights on the language travel industry. Contributors are owners, directors, managers, teachers or administrative staff of IALC-accredited language schools worldwide.

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