I Don’t Need Incentives

Many companies think that incentives are “double dipping.”  I’m running some spiff program or worse, a full-year incentive program to pay employees (either operations or salespeople) to do the job I hired them to do.  I don’t need an incentive program to motivate someone to do what their salary or hourly wage already should motivate them.  Wrong.  Human psychology is a little more complex than that.  Remember the old Hawthorne studies that we all heard about in Business School.  They turned the lights up and productivity went up.  They turned the lights down and productivity went up.  What they deduced was that any attention paid to the employees had a positive effect.

We come a little farther since those studies and the negative incentive (Do this or you’re fired) to realize that “the stick” is not as powerful in the long run as “the carrot.”  It’s not about just rewarding someone for doing their job either.  Incentives are grounded in human psychology.  They target the audience that can have a positive impact on the business issue; engage them; communicate the objectives; track their performance toward stated goals; reward them for attainment and analyze the effectiveness. 

There are lots of programs that don’t work.  Many times, a company will create their own rules for an incentive, think they have all the bases covered, run the program and then find out the ROI was negative.  That may be enough for them never to run another program.  Too bad.  They can learn a lot from incentive professionals that have designed hundreds if not thousands of programs and know where there are pitfalls.