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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


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