I had the chance yesterday to collaborate with my friends at Halogen Software and put on a webinar Will Incentives Perform For You? about figuring the fit and feasibility of financial incentives. I really enjoyed the session and wanted to share a couple of thoughts from it here today.
Financial incentives have been getting a bad rap lately; much of it - unfortunately - deserved. Let's face it: Many of the claims about the negative consequences of financial rewards are, if you'll forgive the pun, on the money. My experience has taught me that incentives - despite the minefield that apparently surrounds them - can be a powerful force for the positive in an organization, but it takes discipline and sound process to make that happen ... things that can be tough to come by in our hurry-up, I-needed-it-yesterday world.
Effective incentive plans:
- Are thoughtfully conceived and carefully implemented.
- Acknowledge the place of rewards as part of the overall system in which performance must be improved.
I believe that figuring out whether incentives will perform for you essentially comes down to asking and answering a couple of key questions:
Question 1: To what extent is the performance challenge a reward problem? (Which means drilling down to discover the real obstacles to the desired performance and determining which are likely to be positively impacted by rewards and which must be addressed in other ways.)
Question 2: If rewards are part of the answer, are incentives the best choice? (Remember that you have other reward levers - such as recognition or premium pay opportunities - to consider)
This means that incentive plan development - done right - does not begin by sitting down at a conference room table and sketching out design ideas on the white board. It begins with information gathering - what we consultants like to call "discovery". Discovery is the process by which you go around asking the key questions highlighted above and collect the information necessary to answer them.
The secrets to a successful discovery effort? I think they are:
- A great list of questions, which of course requires that you learn and reflect on the situation a little in advance.
- A strong sense of curiosity and the will to let it lead you forward. Be gracious and professional, yes, but also be willing to push until you get the information you need.
- A bit of political savvy. More on this below.
This third point is important because not every "customer" who asks for an incentive plan is willing to sit still for a feasibility study. They want what they want. In these cases, I simply position the discovery step as the first part of designing their plan - which, of course, it is. Then, if I encounter ringing bells and warning lights along the information gathering path, I bring the results back to them. Not as an adversary trying to rain on their incentive parade, but as a business partner trying to help them accomplish their objectives. Sometimes a delicate dance, yes.
A few of my thoughts. What tips and tricks can you share on figuring the feasibility of incentives?
Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time. Follow her on Twitter at @annbares.