Skip to main content

Do rewards and incentives work?

How do you get the balance right?   Economic times are tough, people are feeling it out there, and we need to ensure that there is financial stability in companies while employees are worried about simply paying the bills every month, without going further into debt.

The question we ask ourselves at +Accsys (Pty) Ltd is "Do commission models and incentive schemes drive the right behaviour?"

The issue is across the board from junior roles who might be waiting for a bonus, to senior management who are on profit share schemes - does the opportunity to up your personal income encourage long term commitment to growth?

 Constant focus on quarterly, half yearly and annual results may also create a short term view.   So how do you keep current results in mind, without neglecting the future?

Both reading and experience have shown me that incentives and rewards will be effective if they are part of an overall approach where the incentivees (is there such a word?) buy into the company objectives.   Otherwise, they may be seen as a risk mitigating model, rather than a reward system.

I have read articles and books which suggest that if you pay the right salary, sort out the company culture and hygiene issues, you don't really need additional incentive schemes to motivate people.

Tell that to businesses who pay commission based on financial performance!

I don't profess to know all the answers.  I do know, though, that there are people who consistently do their absolute best, rewards or not.   I also know that an unexpected financial thank you can be a great motivator (so is a genuine thank you with no financial reward, we all like to be appreciated).

It certainly makes sense not to treat each year in isolation when you are incentivising executives, but to design rolling reward systems that build to a good payout for consistent performance over a period of years.

Maybe it makes sense for everybody....


Links, Notes and References


Why Incentive Plans cannot work - Harvard Business Review
Do incentive plans really work?
Accsys (Pty) Ltd


Note

Thank you for reading Teryl@Work.   Should you wish to use any of the material, please acknowledge this blog as the source.

Popular posts from this blog

Agile workers & workspaces - a new way of working..

Being an agile worker is still a work in progress…
Is flexibility now a reality in the workplace?And is it really working? We keep renaming it – remote, activity based and agile work being some of the current terms. The assumption of control over one’s own time and deliverables does look like a great way to work and live, and it seems to be is a high priority for those entering the business world. There is also the development of the agile work space, where people come to the office each day, but don’t have a fixed work area.We used to call it hot desking back in the day and it met with mixed success.Today, office designers have started to create work spaces which are intended to encourage innovative thought, cross departmental collaboration and improved productivity. My research indicates that the mix of engaged and disengaged employees in an open plan workspace does not always have the desired effect of the positive workers influencing the culture.In fact, a case study of a senior execut…

The Gig Economy - HR and other issues

The Gig Economy has emerged as a topic of discussion and I understand that Intuit has posited that 40% of US workers will be independent contractors by 2020.  That is 3 years away! What is a gig employee?  Uber, Lyft, and Airbnb all utilize gig employees as the delivery mechanism for their apps.   While they are all clear that they are just an App and don’t employ the gig employees, governments and employer bodies are analyzing the risks and reports are indicating that they are significant. As a contract worker, which is how Uber defines their drivers, there is not an employer/employee contract in place.    While Uber, and other similar companies, create the mechanism for people to deliver a service, they consider themselves brokers, for want of a better word, and not employers. The UK is looking into the situation and considering legal structures .  The concerns are particularly when people have a single source of income, although they are not formally employed.  This leaves them in a …

Setting Budgets and Targets

Does too much of a stretch impact motivation?    Over many years of setting (and trying to achieve) targets and budgets, getting the balance right between stretch and motivation remains a challenge.

I love Jim Collins and Jerry Porras and their BHAGs in their great book, Built to Last, but if the goals are seen as unachievable too early in the business year, what then?

Is there a way for businesses to achieve success without budgets and targets in place?

Two old favourites " You can only manage what you can measure" and "People do what managers measure" suggest that they can't.  I am sure there must be successful businesses with different methodologies, but most of us need to work towards something.

With that in mind, I think there needs to be stretch, and there needs to be a sense of achievability.

Why would you race against Usain Bolt unless you think you could win?

The same goes for budgets and targets, people need to believe they are possible.

So how do you…