Global Warming and Incentive Programs - More in Common Than You Think

There is a bit of a dust-up going on in the "Incentive Compensation" Linkedin Group I belong to.  Two players in the incentive industry going head to head around - wait for it... whether to use cash (or cash equivalent) or "awards" such as merchandise and travel.

You'd think after so many years and so many studies this bet would have been settled.  

Unfortunately, determining the single "best" award in an incentive program is like trying to focus on the single thing that causes global warming (if you believe it is, or isn't happening - don't comment on that - this is illustrative only.)

Global Warming

Ask the expert (by which I mean Google) what causes global warming and you get some of these results:

• The sun has been gaining strength and is at it's strongest in sixty years 
• Sunspots are the cause or catalyst for Global Warming.
• The slow tilting of the earth's axis has an effect on the climate of the earth
• The greenhouse effect caused naturally by carbon dioxide, water vapor, methane and ozone 
• Solar variation - changes in the amount of radiant energy emitted by the Sun - has been correlated with the changes in the Earth's climate and temperature
• Rapid industrialization increased the release of various gases like carbon-dioxide and methane
• Deforestation increases global warming
• Burning fossil fuels increases carbon dioxide - increasing greenhouse gasses increasing global warming 

Which of these is causing global warming?  

ALL of them are probably contributors to global warming.

In other words - not one of the causes above is THE cause.  They are all causes.  Trying to focus on one without looking at modifying the others would be fruitless.  (If in fact the sun is the cause - I'd like to see the plan that reduces the heat from the sun - can anyone say "Simpsons big umbrella")

Incentive Programs

The discussion on the Linkedin Group is similar.  In one corner you have reloadable gift cards (pretty close to cash in my book) and in the other "awards."

Neither is wrong - neither is right.  In one case the company sells gift cards (surprise - they think they have the right answer.)  In the other case the company sells "points" redeemable for awards (surprise - they think they have the right answer.)

And we had one person who is on the receiving end of incentive programs chiming in with "give me cash."

I love this stuff...

The REAL Right Answer

If your compensation system is flawed - cash may just be the right answer.  You can't give someone making $5.00 an hour a merchandise award and have them feel great if they can't pay their heating bill.  Fix that first.  Then think about how to drive performance.

If you're looking for a short-term program that focuses behavior - just about any other award system will work.  Which one to use is a function of the audience's history with incentives.  If they already have experience with reloadable cards - probably a good thing.  If not - I would start with a more "disconnected" structure - like points - to eliminate the connection to dollars (psychologically we get weird when we introduce dollar signs - focuses us on the "transactional side" of the equation.)

If you want long-term behavior change - communication and recognition (the act, not the item) is going to be one of your best options.

And if you really, really want to do it right...

Start from scratch and combine all the different tactics in a well-thought-out strategy that takes into account all the different ways human beings can be influenced...

• Communications
• Training
• Incentives
• Rewards
• Recognition
• Measurement
• Autonomy*
• Purpose*
• Mastery*

(* yeah - I included the stuff from Dan Pink's Drive.)

 What's on the Invoice Matters

So what is a person to do?

My recommendation to anyone who is in the market for programs to drive behavior - ask your "consultant" what their invoice will look like.  If they invoice you for stuff (awards, points, cards, trips) that is what your program will be designed around.  And designed to maximize THEIR return - not just yours.

If their invoice is more around the design then you have someone more interested in the success of the program than that success of selling items.  

The net-net - you are what you invoice and global warming is the result of badly designed incentive programs.  That's my story and I'm sticking to it.

Comments

[Javier Melendez]

This is a great post that tells me that the bottom line really matters when designing the organization incentive programs such as: rewards and recognition programs, as we need to adapt them to their needs so that we can drive their behavior to work together for that common goal so that we get not only our return, but also their return as the author said, by creating an affective commitment on our employees. thank you very much for sharing this good stuff!

[Nathaniel heisler]

I like how you insist that global warming is caused by lack of good incentive programs. I can see how this is true, because we waste so much in trying to get new customers and hang on to existing customers without the thought behind it that maybe all this is just nothing more than the beginning of our demise. We think we are doing so great and in reality we aren't even looking at the broader picture. If we designed a capitalistic society that strives towards the overall well-being of the future, maybe we wouldn't be in this mess.