teria including those above. You know you are in real trouble when the various criteria are given weightings. You also know when you are in trouble when you ask people how their incentive is calculated and they tell you that they haven’t got a clue. Then there is a question of longevity. How long has the incentive scheme been in place, and how much longer will it survive? There are probably dozens of golden rules. Thus far three have been identified: 1. Accept that there is no perfect scheme 2. Accept that an incentive scheme will have a lifespan 3. Keep it simple. Everyone must be able to understand exactly how the incentive scheme works. Another question is who to incentivise? If you are looking at incentivising buyers, what about the planners? What about the stores who do the hard yards selling? Do you have a separate system for stores? Do you reward other members of the team such as the back office people or those providing services to the business? Do you have schemes based on individual performance or on team performance? There are advantages and disadvantages to both. If you are looking at buyers, there may be a reward for the buyer and/or team that works with that buyer. When it comes to sales people, it can get tricky.  Individual incentives can lead to a dog eats dog mentality with the customer caught up somewhere in between. What about more senior folk? What quantum of incentive do you want people to be able to earn? If they can double or treble their basic wage, is this good or bad? What happens when staff are used to incentives being paid month after month and suddenly there is a downturn? Meanwhile they are living their lives based on their recent performance. 4. Who to incentivise and how? 5. How much do you want your staff to earn through incentives? This often depends on the individual. Some thrive on the challenge, others don’t, and you can’t have incentive schemes tailored to every single person. I am familiar with one of the world’s top software vendors. While it has now reduced incentives, its top sales folk used to earn $5 million to  $6 million over say a three year period. It was rather like living a lottery existence. You received a liveable wage and worked hard to make a good deal every year or two. If you didn’t, you were terminated. If you did, you would perhaps throw in the towel. One unique incentive scheme I came across in retail some years ago was designed to reduce the risk of backhanders being paid to buyers – something we don’t like talking about, but it certainly exists. The buyer was paid a fairly ordinary basic monthly salary and had a gross profit target. Everything above the target was theirs. Rather like the traffic cops in Indonesia. They get paid a minimal wage and a bag of rice and then it is over to them to write their salary cheque. They even have little books printed detailing the offence and fine. A kind of privatisation of the road penalty system. Changing existing incentive schemes is not easy because there are invariably winners and losers. For this reason some companies opt to hire third parties to act as impartial arbitrators while others go it alone – usually with mixed results. Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702