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What to consider when designing staff incentive schemes

There is a common misconception that incentivising staff to sell is wrong. That it will lead to mis-selling. That customers will be told anything to get them to sign on the dotted line.

A well designed and managed remuneration plan cannot only avoid these pitfalls but reassure your customers and even aid in the sale. It takes more than simply giving your staff a bonus, however – a lot more.

The Financial Conduct Authority (FCA) does not prescribe how firms should and should not incentivise staff, but they have issued guidance with clear standards. That means there are several things to consider when giving your staff an incentive to sell products and services.

What should you be asking yourself?

When it comes to reviewing and designing your staff incentive schemes, there are several questions you should be asking. These are:

• Will the way staff are paid cause them to act in a way that benefits them but is bad for customers? How would we spot such activity if it occurred?
• Do our key performance indicators provide this information? If not, why not?
• Do we monitor for potentially suspicious or unusual activity, especially when staff are getting increased pay due to incentives?
• Can we see where customers could be mis-informed or wrongly advised in an effort to get the sale?
• How do we monitor that staff are not putting their own interests before those of the client?
• Can we demonstrate effective controls in incentive-related areas?

If you’d like to learn more, download our eBook FCA regulations and the key considerations when reviewing your incentive scheme.

What does the FCA consider mis-selling?

The term mis-selling means a failure to deliver fair outcomes for consumers. These outcomes include:

• Fair treatment for customers
• Customers understand the key features of the product or service and when they are receiving advice or information
• The information given to customers is clear, fair and not misleading
• Customers buying on an advised basis are recommended suitable products.

For further information on incentives, keep visiting the Car Care Plan blog and look for our next post: What does a good incentive look like?