Incentive and Reward – why organisation-wide schemes often fail

It’s important to be clear about the behaviours that you are seeking to reinforce, the diversity of people and their tendency to find jobs that suit their personality, and to ensure that complex and conflicting desirable behaviours are suitably reinforced.

Someone recently asked for assistance in designing an incentive scheme. Over the years, I’ve been involved in establishing quite a few, especially related to performance improvement, changes in culture (including the attitudes and behaviours that people demonstrate at work) and yet I often feel myself cringe when I learn of the schemes that some organisations put into place. Why is it so difficult to find a solution that works? Well, here are a few of the complexities…

Some types of people, who gravitate into certain types of role, are more responsive to certain types of incentive scheme. Organisation wide schemes therefore need to take this into account whereas schemes concerned with one area (eg Sales, Operations, or HR) each need to be tailored to the psyche of the individuals and their likely personal circumstances. (This is one reason for the popularity of “currency” schemes in the last few years.) For instance, sales people generally measure their self-worth in financial terms – that’s why they are often driven [sorry!] to have better cars and more prestigious accoutrements. Operations professionals may get enormous satisfaction out of the buzz of day-to-day problem solving and love the thrill of tackling challenges, some of them seek similar excitement in their free-time, while others look for opportunities to enjoy the luxury of relaxation. HR staff often entered the profession because they wanted to see their fellow human beings treated fairly at work (sadly, today they quickly discover that this is not the role of HR, but that’s another issue) and so they respond well to personal recognition and individual attention.

It is important to reward the right behaviours. A scheme for senior managers might reward demonstrable leadership skills, whereas one for front-line workers might reward team behaviour (IF they work in a team) or speed of processing (if they work independently). Most groups have a variety of behaviours that you are specifically trying to incentivise and so the scheme needs to reflect this overall.

However, there are some behaviours that you do NOT want to incentivise – not just because they are negative (eg bullying) but because they should be a part of “the way we do things around here” and therefore non-negotiable (for instance, taking the initiative in problem-solving).

Controversially, I admit, but I would argue that most productivity related bonuses fall into this category – we expect people to do their best and to pace their work to deliver the most performance in a given time. (This could be the only thing my management philosophy has in common with that of Alan Sugar.) This is non-negotiable and failure to do it might be considered a reason for management intervention (ie investigation or discipline) but doing it should not be incentivised.

Most schemes though have to compromise, as there are usually conflicting priorities in most jobs – this is why decision making is an important skill for managers or for people who are self-managing. Again, it’s important for the scheme to reflect this underlying skill rather than (one or other of) the individual behaviours. The classic blunder of such schemes is to incentivise the sales force for sales value (period), where their efforts can easily cause untold problems in operations and ultimately lead to dissatisfied customers.

I hope this provides food for thought, as they say. To begin with, why don’t you spend a few minutes reflecting on what would incentivise you to do something different with your time TODAY? That might give you an insight into the complexity of such schemes.

Best wishes

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