To Pay or Not Pay a Sales Bonus?

There has been a great deal of dialogue about whether it is ethical or not to pay bonuses to home care and hospice sales people for referral and admission growth. The National Hospice and Palliative Care Organization came out with a statement that said they believe it is not ethical. Some larger consulting firm also hold this view? What do you think?? I happen to disagree with this thinking.

Bonus Payments

The thinking here is that this is unethical because it will lead to inappropriate admissions. I think these people forget that sales staff do not establish hospice eligibility, admission nurses do!! I agree it would be unethical to bonus admission nurses on admission growth as that would create opportunities for fraud and abuse. But, I do not believe this is the case with sales staff. Their job is to educate and assist referral sources and people who inquire about hospice and home care so they can access their Medicare benefit. They do not, however, make the important decision about whether they meet eligibility.

To take a sale performance bonus out of use would, in my opinion, severely hinder an organization’s ability to implement its ability to serve more people and grow. With the realization of health care being a business that functions in a free marketplace require the sales/marketing function to be compensated appropriately.

A well-designed (unfortunately some home care and hospice organizations do not have well designed bonus programs) sales compensation package will enable home care and hospice companies to focus its sales activities on desired results, tie the rewards directly to achievement level, and be sufficiently flexible to handle future market shifts. As the organization’s business model and marketing plan vary, the sales compensation package needs to reflect this new strategy.

The key to a successful sales compensation program can be achieved in four (4) steps:

  1. Clearly defining sales expectations and goals that are realistic but challenging.
  2. Tracking and accurately measuring performance against expectations.
  3. Rewarding achievement with competitive compensation and motivational features that provide a Win/Win for both the company and the sales force.
  4. Monitoring the results, modifying the plan when necessary, and keeping the sales personnel informed.

Sales compensation packages typically comprise one or more of the following components:

  • Base salary or draw against commissions
  • Commissions tied to short-term goal attainment
  • Incentives/bonuses tied to annual sales results
  • “Spiffs” and other focused incentives
  • Achievement or Career recognition
  • Participation in long-term equity type plans, particularly for Super Stars

What is your organization’s point of view?

The Best!

Please note: I reserve the right to delete comments that are offensive or off-topic.

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