Bauer Business Focus

Monetary Incentives: Good or Bad?

They should be used carefully



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Monetary incentives may seem like a good strategy to motivate a company's salesforce, but Assistant Professor of Marketing and Entrepreneurship Martin Kraemer at the Bauer College of Business at the University of Houston says this short-term reward may have adverse effects on performance.

“Typically, companies use monetary incentives that reward short-term financial performance. Even though this motivates salespeople to work harder, this tactic can drive a myopic focus on selling and more aggressive sales tactics that might harm the long-term goals of the company like relationship building with customers.”

“Although incentives are a major tool for motivating the salesforce, they should be used carefully to avoid unintended consequences.”

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