Cafe Classic: Reward Design is a Balancing Act!

Editor's Note: Reward design is no place for quick-fix artists and thoughtless amateurs. 

Rewards can be powerful things.  Poorly aimed and carelessly fired, they can do real damage.  I like the image evoked by Dan and Chip Heath when they compare incentives to a jet engine: "There's no question that the engine will take you somewhere, fast, but it's not always clear where.  Or what you're going to mow down on the way."

Work today, regardless of the job or employer, is a complex thing.  Employee performance and contributions are rarely as straightforward and easily discerned as we like to pretend.  A number of bloggers, both inside and outside the Cafe, have reinforced this point recently.

Cafe blogger Jim Brennan reminded us that mentoring is a key to talent development and long-term organizational survival - and that we fail to appreciate and recognize those who do it at our own peril.

In another Cafe post, Derek Irvine shared the story of Tom to demonstrate how critical it is to recognize those who contribute consistently and support the success of others, even if they aren't the ones putting the highest score on the board.

Bob Sutton, in his Work Matters blog, warns against "winner take all" incentives that lavish rewards on the select few and leave ordinary performers with just the crumbs, and notes the climate of cheating that such programs can promote.

Strong stories and sound advice.  And if there is a common thread running through all this advice about rewards, I would submit that it is the imperative of balance.

Effective reward design must carefully sense and balance all sorts of competing priorities and tensions, including (but not limited to):

The greater team versus the individual

Results versus behaviors

Short-term versus long-term

Quantity versus quality

Speed versus service and attention

"Stars" versus supporting players

Critical skills versus all other (also important) skills

If there is one immutable law of reward design, it is that pushing too hard in one direction or the other, toward one desired end at the expense of another, invariably leaves unhappy, unintended consequences in its wake. 

So, better doggone well take the time to map out and appreciate the full lay of the land, including all those competing interests and priorities.  Better have a pretty solid idea of where that jet engine is likely to go when it takes off and what else lies along that path, at risk for being mowed down.  Failing that, you got no business designing and implementing rewards, my friend.

It's a balancing act, baby, and no place for amateurs. 

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys hiking, reading and hanging out with family in any spare time. 

Image “Spa Stones Shows Equal Value And Balanced” by Stuart Miles via FreeDigitalPhotos.net

Comments

[E. James (Jim) Brennan]

One of these days, psychometics will become an essential element in Human Resource management and a guiding force in Total Rewards design protocols.

How to measure, track, prioritize, weight and "score" those seven design features listed above on both an individual and an organizational basis will become a popular research topic. Unfortunately, many a thesis or dissertation will probably start off by assigning arbitrary values to many of the variables, thus falling prey to "a priori" thinking, which will severely minimize the value of any thus-tainted findings. I can think of many cases in which the "competing priorities and tensions" would vary between enterprises and working environments. One size never fits all... which is the bane of the theoretical academician. That has relatively no effect on the profitability of consultant applications, however.

I'll leave the thought with one final question: was the selection of the number of oval stones shown in the clever visual image determined by the number of enumerated "priorities and tensions" or was that list of factors selected to match the count of the visual aid items? Chicken & egg stuff, again! SSDD.

[Ann Bares]

Hi Jim,

Thanks for the comments. We would certainly benefit by upping our game in this arena - no question!

Re: the final question - I think you know me well enough that you should have assumed it was simply a happy accident. No chicken no egg. :)

Ann