When Sales Incentives Backfire

Sales incentive plans can be undermined when salespeople exploit loopholes for personal gain, prompting companies to understand and address these tactics. Timothy Gardner and Colin Wong, co-authors of the HBR article "How Salespeople Game the System," discuss common schemes such as partnering with customers to exploit promotional deals, creating fake customers, and falsifying data to boost commissions. Companies often fail to anticipate the unintended consequences of incentive plans, leading to additional costs and compromised revenue growth. To counter these issues, leaders should analyze data for patterns indicative of gaming, systematically review incentive structures, and collaborate with sales teams to implement changes, balancing the need for control with the risk of alienating top performers.