Who doesn't like a bonus? It is always nice to get more in your pay packet than usual. A bonus naturally make you feel good about things, and – particularly when you have worked hard to earn it – helps you to feel appreciated and that all your effort was worthwhile. Even if it isn’t as much as you would have liked, it is still better than nothing! Yet I would wager that there have been times when you have questioned the whole process.
Possibly because you have seen others being rewarded when you didn’t think they deserved it. Or perhaps because earning it has caused colleagues to act in ways that have made your job more difficult. If you are totally honest, you might even admit that you have shaped your own performance targets or measures in ways that make earning your bonus more likely. And that, perhaps, is the major flaw with incentive remuneration or performance related pay schemes: everyone manipulates them but, because everyone has the personal potential to earn more, no-one ever stops to ascertain just how effective they really are.
Yet business publications and management books are full of stories, examples and case studies of the ill-effects of misguided incentives. The problem is that, even if they don’t motivate directly, incentives do shape behaviour, and invariably not to good effect. This is perfectly illustrated by Daniel Pink’s findings on motivation. (If you have not already seen this ten minute video I thoroughly recommend that you do so now.) However daunting the prospect, his conclusion that incentives are actually counter-productive should be enough to impel you to re-evaluate your incentive remuneration scheme.
I understand why you might be reluctant to do so. Setting up such a scheme initially was unlikely to have been an easy exercise. So changing or ending it presents a very daunting prospect. But what damage could your scheme be doing to your organisation and at what cost?
You need to think of your organisation as an organism, looking to survive and thrive in a competitive, constantly changing marketplace through the interaction of people operating any number of processes and systems. All this interaction creates enormous complexity. Creating individual incentives around personal performance has a multiplier effect on this complexity. Rather like squeezing a balloon, you have very little idea what effect an incentive designed to change behaviour in one department will have on the rest of the organisation. So why give yourself that additional headache?
Instead rather create something that considers the organisation as a single entity and ensure that everyone works together effectively for the greater good of the organisation and is duly rewarded in accordance with how the organisation performs. It may sound paradoxical, but my ‘Every Individual Matters’ model gives you that capability. It focuses on the individual and their contribution to the organisation, thereby strengthening the synergy, strategic alignment and sustainability of the organisation while providing a universal and equitable rewards structure that significantly reduces the management burden and thus the levels of stress associated with planning, measuring and rewarding individual performance.
_____________________________________________________________________________
Contact me today for a free 30 minute conversation about how my ‘Every Individual Matters’ model can help you create an organisational culture that embraces change and transforms – and sustains – organisational performance.
_____________________________________________________________________________
Bay is the founder and director of Zealise, and the creator of the ‘Every Individual Matters’ organisational culture model that helps transform organisational performance and bottom-line results. Bay is also the author of several books, including “Lean Organisations Need FAT People” and “The 7 Deadly Toxins of Employee Engagement.”