Does your incentive system work?

I recently had the opportunity to talk with executives about the issues they experience with incentives implementation, and what we call in Drive Business Performance, the multiple "currencies" of performance.  

We observed that organizations consistently find themselves implementing incentives and disincentives that create, in the short and long term, the exact opposite behaviors their system was originally built for.   For instance, you might have heard of the Israeli childcare which disincentives program (charging parents for late pick up) backfired on them as parents judged that the benefits of later pick-ups outweighed the daycare's fees (this should give 'food-for-thoughts' to the schools in France and the US which are implementing an cash-to-read program for their students...).

Poor incentive practices often stand in the way of companies' ability to execute their strategy - yet, few can find a methodology  that works. 

It seems that there are multiple factors to consider - I'm enumerating a few below.  What are your thoughts, have you seen best practices within your organizations or at clients?

• The purpose of incentives -  while this seems obvious, many are reminded that incentives are only a means to an end; the purpose of incentives is the behavior they incent.  Has the organization carefully considered the behavior they are trying to incent and the connection between behavior and the incentive?
• The breadth of incentive systems - as it turns out, employees respond to a much wider panel of incentives than their companies are ready to offer.  This is what we call in Drive Business Performance, the multiple "currencies" of performance.  A broadening of incentive offers is often effective - from money, to education help, to more vacation, to more time with valued members of the executive team, for instance.
• The types of employee personality - employees are unique in the way they react to incentives.  For instance, two marketing managers, with the same job description, could quite possibly value different incentives.  An 'employee type' incentive system could be imagined, by which employees would be proposed a choice of compensation options  aligned to the purpose of their jobs and what motivates them most.  They could modified their choice every year in case their personal situations changed.

While this 'personalization' of incentives is argued by some as the most difficult to implement, it certainly feel like as untapped potential.  Many say that it leads to better employee satisfaction and is a great way for companies to see what works best with the various personality types of employees that compose their organizational culture.

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Best,

Bruno Aziza

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