When the Bribery Act came into force last July, it’s aim was to modernise the law on bribery and allow more effective prosecution. Nevertheless, so far it’s untested.
Section 1 of the Act not only covers obvious bribes, but also rewards perceived to be of sufficient value to sway purchasing decisions – holidays, new kitchens, excessive hospitality at sporting events, and so on. This is a grey area of bribery which companies must safeguard against. As such, the Act is a prompt to re-examine incentives in the motor industry and learn for ourselves the difference between bribery and loyalty.
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The balance comes down to risk management. Companies must demonstrate that they are watching the situation and not merely complying with legislation. In simple terms: Get a policy and monitor it, because ignorance is no longer a defence.
All managers know that to make successful changes in a workplace, they have to get involved. Top-level commitment sets the example and enfranchises employees.
With dealerships struggling to maintain high sales performance, particularly as the economy suffers, employee incentives and engagement are critical in countering sales team attrition. The recession has inflated the struggle to find talent, poor sales people have been exposed and everybody is competing aggressively to keep the best sales staff.
Employers are now compelled to review their methods of staying ahead in this competition, such as reward and recognition schemes. Though the Act is unclear, there is an understanding that cash, vouchers or loaded credit cards are now more likely to attract the attention of the authorities.
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By GlobalDataAs voucher incentives have expanded in car sales, so has the choice of retail outlets for such schemes. The perception is that capital and bonus bonds are now little different to cash and liable to be judged as a cash-style incentive.
If there is a way to offer incentives through a loyalty programme, dealerships, concerned about the style of rewards, want to find it.
In my opinion, even without the new legislation, cash incentives fall down in that they are essentially used to enhance salary, rather than truly incentivising staff to strive to achieve the strategy of the dealership. When I ran incentives, the objective was always to offer a tangible prize, one that included advocacy and pride. Cash and vouchers’ common acceptance, often built into salary expectations, reduce the sense of achievement compared to a reward linked to performance.
For all these reasons, we at Cordoba are promoting our Rewards loyalty programme. Rewards vary depending on the objective of the dealership, from 0.25% to 3% of deal value in our experience. Objectives can be set to drive dealer strategy or increase sales, without infringing on the new guidance laid out by the Bribery Act and, crucially, retaining loyalty without bribery.
Peter McDonnell is CEO of the Cordoba Group and MD of Cordoba Rewards
