Sales incentive scheme: insights from the Malaysian telecommunication sector

Abstract

Pay is often the most important staff motivator and an effective system of incentives could help retain existing staff; increase staff motivation, morale and loyalty; boost productivity of the organisation; link individual and business performance; focus employees on achieving targets and also build teamwork among themselves. Appelbaum and Mackenzie (1996) stated that incentive plans are cash payments made to employees when they exceed predetermined job or organisational goals, and serve as inducements to produce specific results desired by the organisation. These metrics can be fiscal targets (sales and bookings), production output, or productivity gains (cost reduction, quality), etc. Both merit and incentive pay plans are considered forms of result-oriented compensation, recognising superior job performance in the belief that such performance has made a valuable contribution to the organization's effectiveness (Kanungo and Mendonca, 1992). This study specifically will look into how an organisation (a major telecommunication organisation in Malaysia) introduced a more attractive pay system via a sales incentive scheme (SIS), and was able to recognise and reward its highly competent employees. This then impacted positively on the performance of the said employees.

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