Performance Monitoring components
Employee Incentive Program
The chart below details the breakdown of each component and the reason for its inclusion.
| Performance Monitoring Component | Component Breakdown | Reason for its Inclusion |
|---|---|---|
| EMPLOYEE INCENTIVE PROGRAM | Rewards | Reward is simply the acknowledgement for a job well done - the positive reinforcement for the behavior expected. However, we have to examine application of rewards very carefully to ensure we are benefiting the receiver of the reward not the giver. Note that intrinsic rewards, driven by internal emotions, are those that benefit the receiver. Extrinsic rewards come from outside the individual and, while appearing to benefit the receiver, tend to benefit the giver of the reward. |
| The myth of rewards | The benefits of extrinsic rewards of cash, bonus points, etc., are so entrenched in our society that "everyone knows that incentives are how we get things done." We are so entrenched in "do-this-and-you'll-get-that" or the "carrot and stick" philosophy, from primary school to post-graduate studies and all through our work careers. We are coaxed and "motivated" by rewards and incentives. Our culture is thoroughly committed to the use of rewards as a path to success. But, alas its effectiveness is a myth. | |
| The reality of rewards | The evidence is overwhelming that the traditional way of rewarding - extrinsic rewards (financial rewards, bonuses, and many forms of praise) have the opposite effect intended. The reality is that most rewards are used to manipulate the behavior of others. Approval is conditionally given, as part of a calculated strategy to shape others' behavior. Conclusions about extrinsic rewards and incentives that are now known are: • Rewards work in the short term. • Rewards do not work in the long term. • Incentive plans are used as a substitute for good management. • The more rewards are used, the more you need to up the stakes. • Rewards actually turn off people from the item for which the reward was designed, after the reward program has been terminated. |
|
| What not to do | Do not use rewards as a means of control. Do not apply collective punishment or collective reward. Do not offer positive comments (praise) that primarily benefit what you want. Do not reward for quality because rewards drive systems away from quality. Ask yourself some questions first: • Is your intention--as the person offering the reward--to teach a skill, promote a value, or boost the self-esteem of the recipient; or is it to get what you want? • How important (big) is the reward that is given? • How closely is the reward tied to quality of performance? |
|
| Negative results that can happen with poorly designed rewards | • Hidden mechanisms to get a job done • Hidden production or tucked-away items • Phony, manipulated records • Hostility towards those who administer the rewards • Cynicism regarding management's fairness • Lack of cooperation with other parts of the company • Collusion to defeat the incentive system • Inhibition to real quality, productivity and output • Short-term behavior rather than long term • Destructive approach towards long-term planning • Bitter losers • Assignment of responsibility without authority • Rewards for factors beyond individual's control |
|
| What drives people? | If you let people be the owners of their jobs rather than the tenants of their jobs, they will raise their own bars. Therefore, remove the barriers to motivation with: • Recognition at work • An ability to have influence at work • Leader honesty and openness • Fair treatment by supervisors • Respect from the boss • A proud feeling about working for employer • An ability to have some input into work schedules • Power over how a job gets done • A sense of trust between workers and employers • Sufficient information to get the job done • Giving a say in decisions affecting one's work • Regular feedback about work from supervisors • Training in the skills necessary for doing the job • Commitment between workers and employers • Clarity about what is expected of the worker • Recognition of workers' family responsibilities |
|
| Guidelines for an incentive program for now | • Stop keeping compensation secret; people guess incorrectly upwards, anyway. • Separate salary review from performance review. • Create 2 basic career paths: specialist and manager. • Do performance reviews at least quarterly. • Focus reviews on the future, not the past. • Pay attention to signs of discontent: absences, etc. • Get employees involved in solutions about them. |
|
| Guidelines for the future employee incentive program | • Treat people well: provide useful feedback. • Have employees help set their own goals. • Remove constraints to motivation. • Remove constraints to lack of autonomy. • Consider replacing commissions with mostly salary. • Find the thrills for each employee via "Self-discovery". • Focus on outcome for individuals, not the means. • Match responsibility with authority. • Decentralize authority – Employee Motivating components. |
|
| Guidelines for praise as a reward | • Don't praise people; praise what they do. • Avoid phony praise (high-pitched tone of voice) • Avoid praise that compares individuals. • Offer positive comments that benefit the recipient. • Offer positive comments in private – not publicly. • Describe failure in terms of a problem to be solved. |
|
| Guidelines for public awards | • Avoid competitive comparisons. • Do not limit the number of winners. • Make public awards fun for everyone, not putdowns. • State the awarder's subjectivity, e.g. coach's award. • Award for things not likely to change behaviors, e.g. longest distance travelled to event. • Provide some unexpected rewards. |
|
| Guidelines for extrinsic rewards | First, establish the real purpose for commissions. • Is it the only possible scheme in a small company to afford salespeople? • Or, is it a way to reward salespeople? Second, apply the appropriate response. i. Affordable to the company • Leave commissions in place but keep it simple. • Choose a company-affordable base salary. • Add a reward that the company can afford. • Indicate this method is temporary till company is stronger financially ii. Commissions as a reward • Allow rewards to come from autonomy and achievement. • Pay a progressive salary for progressive salespeople. • Let super salespeople earn more than sales manager. • Make the commission portion a small part of total. |
Table 3.2. Performance Monitoring component - Employee Incentive Program