Monday, November 5, 2012

Simple principles of Incentives

Incentives are a key part of the basic scaffolding in our business, 'contingent reward' and providing good leadership in administering the systems is clearly important. Equally important is understanding that you shouldn't use incentives to change behaviour, its consistent and disciplined leadership that does this. You could argue that if 'scaffolding' could be that effective, we wouldn't need leaders! Not many of them anyway. Here are some good notes from Skroo on the subject.

The Basics of effective Incentives or rewards
1.     Reward the right outcomes-The outcomes you and your business wants and needs.
2.     If you are not getting the outcomes your want, look at what you are rewarding. It will be wrong.

Your Strategy on rewards (Incentives)

What Do you reward.                        What not to reward                           What do you reward with
Simple CLEAR Outcomes                     Activity                                               The Right KPI’s
you want and need                               Bureaucracy                                        Money
                                                          Minimising risk                                     Recognition
                                                          More Reporting                                      
                                                          Paralysis by Analysis
                                                          Working long hours

How to reward
1.     Understand clearly and simply what outcomes you need and want in your business.
2.     Measure or KPI those outcomes.
3.     Reward them consistently (monthly) and long term. (year after year)

How not to reward
1.     Don’t incentivise people to change their behaviour.