@annbares had done all of us a great service in setting up the Compensation Café blog. She’s pulled together some very smart people who talk regularly on the issues that affect compensation. Rewards being one of those things. In her world – rewards can be cash-based (or compensation-based for you purists) and there’s a bit of non-cash thrown in. Ann is an equal opportunity rewarder knowing that contrary to consensus and the lottery business – money won’t buy you happiness or engaged and happy employees.
Last week they ran a post over at the Café called: "In a Vacuum of Information People Will Use Imagination.”
Pop over and read through it. It is a timely reminder that people don’t like to “not know” something and if they don’t know something for sure – they will fill in the blanks.
Your Incentive Programs Reduce Imagination
Incentive programs are all about the metric – the goal.
You can’t run an incentive if you can’t measure something. #FACT.
Because incentives need data – incentive programs have long been exclusive to sales organizations. For years and years, the most often designed incentive program was either for a field sales force (sales people working for the sponsoring company) or sales incentive programs for the distribution channel (dealers, distributors, jobbers, etc.) Those jobs lent themselves to incentives due to an established tracking capability and a practice of reporting specific activity - represented by sales numbers. There was no getting away from the data. Either you sold more or you didn’t.
I have also seen an increase in programs designed for call centers – again a very transparent and trackable job. It is easy to see how many calls made, how long on the phone, how the call ended up, etc. Call centers, sales people – transparent. It is hard to hide from the facts in sales and in call centers. (We can argue in another post if the metrics are the right ones or not.)
Since it is easy to see performance, you don’t need to use your imagination. The facts are there for all to see. Top sales person – check the stats. No imagination needed.
Other jobs however, are pretty opaque. It is much more difficult to see if a marketing copywriter is doing what is necessary. A lot of that job is opinion. No score card to look at.
More Data – Less Imagination
That was a long intro in this little piece of information...
Remove imagination from the job when designing incentive programs.
Take the time to find those metrics that make a job less opaque. Look for ways to make a job transparent and you can find ways to structure incentives and rewards around them. If you always believed a job was too “squishy” to identify specific behaviors and goals – I urge you to work harder. I know I can find at least 5 behaviors for ANY job that can be impacted through an incentive.
Should every job have an incentive – probably.
Should every job have an incentive that lasts forever and skews behaviors toward unintended consequences – absolutely not!
Don’t Think Outputs – Think Process
Designing your incentive program is different in the absence of hard, traditionally tracked metrics like “sales.” When designing incentive programs for these “soft” positions you need to work hard at identifying what is “good” performance – what is “great” performance and what is “unacceptable” performance. From those definitions, you need to work backwards and identify the behaviors that drive those results.
Yeah – a bit harder than simply saying – “we’ll give you ‘X’ points per word” (using the copywriting example.) However, if you want to improve the behaviors that drive exceptional performance it is a necessary job. Copywriters must have a command of the language. Do they write good? (wink, wink.) Do they know how to turn a phrase? Can you point to a good example of that? Do they apply some of the tried and true headline practices (number are better headlines – we all like to read “The Top 10...”) Do they learn from previous copy? Do they routinely check results on their past work? (I’m guessing your best writers always review history to see what’s working and what isn’t.)
Every job has a set of behaviors that if practiced regularly are the backbone of good performance. That is what you design your incentive around.
That is what eliminates imagination from the incentive program.
It seems to me that imagination is somewhat necessary in emerging markets, as many of the new jobs being created require some imagination to even come up with review and incentive programs. Furthermore, in a number of industries - high-tech industries for example - many of the incentive programs revolve around performance reviews and accuracy of work. If someone performs their work with better accuracy, they will undoubtedly get better incentives (such as pay raises) over the course of their careers. On one hand, some processes are easy to track accuracy, which requires little imagination, because some processes in technology have built-in accuracy trackers. On the other hand, with most customer-facing jobs in which there is little interaction between the employee and the tracking systems, this situation would require some imagination and creativity to come up with an incentive system. I suppose it ultimately depends on the work environment, and that company's dependency on technology, to see how much imagination it really takes in creating an incentive program.
Posted by: William Wheeler | February 07, 2011 at 04:15 PM
Thanks for commenting William. My point wasn't to say that you don't need imagination to create the metrics - as you pointed out we probably need that more than ever.
What I was referring to is that without metrics - people will substitute their imagination on what their performance level is (good and bad.) Without the metric it creates a situation where I can "believe" anything I want. Managers need to be sure they have identified the appropriate behavior-based metric in order to eliminate employees using their imagination relating to their performance. But you're spot on that we need to have imagination in order to create the metric - I'm with you on that one!
Posted by: Paul Hebert | February 07, 2011 at 04:29 PM
Even in a very measurable sales environment, the technique of rewarding the activity that will generate the sales instead of the sale itself is proving to be refreshing and rewarding in my small office. I recently switched to a bonus based on quotes given instead of sales written and am starting to see some increased motivation in my sales team. I'm pretty fresh into this new plan, and have yet to see if the outcome will be a total increase in production, but am excited about the boost in moral for my team. Using imagination when looking at the metrics is a definitely a good thing
Posted by: Jenn W | February 13, 2011 at 07:11 PM
Let me know how it ends up at the close of business for the year. Would love to see if you have an overall increase in sales/profits AND moral. The trifecta!
Posted by: Paul Hebert | February 14, 2011 at 06:43 AM