Individual incentive, and collaborative work

By | 11/06/2010

Yesterday I was at a conference with Frédéric Lippi, one of the two managers of Lippi, the 300-employee company that moved to an Enterprise 2.0 model, as I described here.

Amongst the managerial decisions they took, was one to abandon any individual incentives. What Frédéric said is, “You can’t tell people to work in a collaborative way, and give them individual incentives; there is a contradiction in there”.

Some people reacted in the audience, (Frédéric confessed that some people even considered him Marxist), saying that this was too radical, and that there were surely some be cases where individual incentives were appropriate. When I asked them for examples, one mentioned rewards for traders, but for obvious reasons everybody said that it was not a good example…

Then someone said “sales people”. I still believe than even sales people should no longer have individual incentives.

I am working with big French retailers. Retail culture is based on internal competition, and each company love to compare every month which store did better than another, like “oh, Marseille came before Rennes this month, great job!”. But it may happen in some future that they abandon this…

The shift in approach actually comes via the Internet. When e-commerce web sites were first opened, they were considered as another store, and were compared as such. There were many drawbacks to this, let me quote two.

The first one is pricing.

It is usual that each store is responsible for its pricing policy; the same product can have, therefore, different prices according to the city the shop is located. But then, how to price the product on a web site?

The second one is that the Internet is the enemy of sales people, because the web site is a competitor to sale in store.

Unfortunately for them, more and more customers do a lot of online research before buying in the shop. It is shocking to then hear a sales person saying bad things about the Internet.

Then came this practice: any online transaction allocates the money to a physical store.

One interesting result is that, suddenly, the Internet becomes the salesperson’s friend, and sales people become more open to customers who surf on the web.

So, the web site becomes a friend. Then, why not another store from the same brand?

Customers are more and more mobile, and what they see is a brand, not a store. It may happen than a person shops in a store for heavy products, and asks to pick-up in another one. If sales people are individually incentivised, they will lose out.

The Internet is reshaping enterprises into a collaborative mode. I bet that individual incentives will vanish, because it will become counter-productive to achieving sales.

Interestingly, I found a video which explains this even better.


9 thoughts on “Individual incentive, and collaborative work

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  4. serge

    my post was not clear, I have changed. Actually, I meant internal competition between stores of a same brand.

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    Serge, in many ways this is happening defacto in Australian stores; they offer to match or ‘beat’ any price a customer is quoted by another store. Some even offer to beat the price, whatever it is by 5% . This system favours the mega stores, with large stocks and through-put, Coles Myers’ ‘Officeworks’ as an example.

    Such stores probably consider they are ‘competing’. You seem to be suggesting they should reframe their approach as ‘collaborating’, with the end goal being to move product on behalf of the brand, and of course to please the customer.

    But then how is the store that misses out on the sale to be remunerated ? Merely ‘feeling good’ because the sales person has engineered a sale, somewhere, may not be appease the retail outlet’s boss, who must pay the rent, and those Bosses may themselves be answerable to a higher authority, (who probably does not consider him or herself to be God).

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