I've always been fascinated by innovation and the thrill of thinking about something in a way that nobody else ever has. Innovation can drive positive changes in quality, efficiency, and competitiveness. It's no secret that quite a bit of corporate time is spent thinking about how to innovate.
But how do you foster innovation? Spend millions of dollars on state-of-the-art research labs? Encourage riding a unicycle up and down the hallways while juggling, a la Claude Shannon at Bell Labs? Change the company uniform to black turtlenecks and jeans?
You don't have to resort to providing wacky toys or jeopardizing the bottom line with monster R&D labs. Believe it or not, your compensation mix, recognition and rewards programs, and development opportunities can go a long way in creating that next great idea. Here are three ways you can drive innovation with your total rewards strategy:
- Create a safe space for innovation. Employees have to feel comfortable taking calculated risks. The structure of a total rewards program can help create this safe space. The proper balance between salary and incentive compensation creates a safety net. Relying too heavily on incentives can create pressure for achieving short-term returns. Employees may sacrifice work on "the" idea to come up with "an" idea to earn this month's bonus so they can pay their bills. Getting the right mix between salary and incentives removes this concern and frees employees' minds to pursue bigger and better ideas.
- Provide fresh perspectives through development and career opportunities. Addressing the same challenges with the same set of tools day after day can drive even the strongest innovators into a rut. Use professional development and career opportunities to encourage employees to explore their full potential and accumulate diverse experiences. Seeing things from a different vantage point (either because of new skills or a career advancement) can provide that spark of inspiration.
- Recognize and reward innovation throughout the company. Innovation isn't constrained to the mad R&D scientists. Ideas are everywhere, and not all great ideas are for the next iThing or an alternative energy source that will save the planet. Innovation comes in a variety of forms. Each employee - from administrative assistants to zone managers - should be encouraged to innovate from within his or her own function. Everyone should be looking for better ways to do things, and creating an inclusive rewards program extending beyond the R&D labs can encourage this.
Innovation isn't some mystical mojo that some companies have and others don't. It isn't about cultivating a "creative" culture. It's about providing employees with security to explore ideas, tools to realize their potential, and recognition of their achievements.
Stephanie Thomas, Ph.D., is a Lecturer in the Department of Economics at Cornell University. She teaches undergraduate and graduate courses on economic theory and labor economics in the College of Arts and Sciences and in Cornell’s School of Industrial and Labor Relations. Throughout her career, Stephanie has completed research on a variety of topics including wage determination, pay gaps and inequality, and performance-based compensation systems. She frequently provides expert commentary in media outlets such as The New York Times, CBC, and NPR, and has published papers in a variety of journals.