#234 from R&D Innovator Volume 5, Number 9          September 1996

How to Keep Incentives From Becoming Entitlements

by Bob Nelson

Mr. Nelson is vice president of Blanchard Training and Development Inc. in San Diego, California (phone 800-728-6000), and author of 1001 Ways to Reward Employees (Workman Publishing, New York, 1994), now in its 14th printing.

Many R&D managers are hesitant to use incentives in the workplace because of fear of what it may lead to in the way of increased expectations on the part of their staff.  The logic goes:  “If I give them something extra for doing what I expect them to do, I will have to keep giving them more and more in the future to simply maintain what they are doing now.”  Such managers are afraid that the use of incentives in general—money or otherwise—is basically a slippery slope that once begun, can never be contained.

This line of reasoning is unfortunate in that such managers are abandoning one of the most powerful forms of human motivation.  They will never experience the benefits that result in increased morale and productivity, and return to the bottom line from a well-run incentive program.  It is similar to a person who refuses to drive a car because the brakes might fail or because they read that a significant number of people are killed each year while driving their vehicles.

The fact of the matter is, with certain cautions, it can be relatively easy to obtain highly desirable results from the use of incentives in the workplace, while at the same time minimizing the risks to the organization.  Following are a few guidelines I’ve found that can help to keep your use of incentives in check.

Link incentives to performance.  This makes incentives less likely to come across as largesse that is equally distributed to all members of the company whether individuals performed or not, and more closely ties incentives to the success of the organization.  Recognizing such things as birthdays, anniversaries, attendance, years of service or passing out holiday gifts are all examples of programs that are rewarding presence rather than performance.  Yet these are some of the most common incentive programs. 

It is much more beneficial to get employees focusing on behavior and results that can make a difference in the competitive advantage.  Doing so will help break down the notion of the organization as a paternal caretaker of employees.  Rather, employees need to be recognized for the contribution they have made—and earned—for the organization.

Personally deliver recognition.  The most meaningful recognition stems from one’s manager—or others who the employee respects—more so than from the organization (such as an end-of-year awards banquet).  There’s a place for formal recognition awards in every company, but a better place to start is with informal, personal and spontaneous recognition, delivered by one’s manager.  Personally delivered recognition is more apt to be timely as well, an important aspect of any effective positive reinforcement.  Regardless of the activity or item used in recognizing an employee, pay attention to the context of how the recognition takes place.  If possible, use a public setting and reference why the employee behavior or achievement is important for the department or organization.

Allow employee input in designing recognition programs.  Not only will they be able to better establish a criteria for recognition that is deemed fair, they will be able to tell you what items and activities will be the most motivating to them.  Ask for volunteers and you will get those employees who have the most energy for the activity and truly enjoy it.  They will, in addition, best be able to monitor the ongoing success of the program and suggest changes when and if it becomes stale.  The best management is what you do with employees, not to them.  By involving employees in determining recognition programs, you naturally gain their commitment to the program’s success.

Use variety in your choice of incentives.  Not only will having different incentives keep them fresh, but individual incentives will be less likely to become entitlements.  For example, if each quarter the company made its revenue goals, a half-day off was awarded to all employees, by the second or third time, employees will come to expect this incentive as an ongoing benefit for no other reason than it has been done repeatedly.  If, on the other hand, the first quarter you gave employees a half-day off, the second quarter you did nothing and the third quarter you held an ice-cream party, the variety not only adds fun to the workplace, it minimizes the expectations that can arise from the repeated use of the same incentive.  The same logic holds true for incentive programs.  Change them when they start to become stale or lose their effectiveness.

Emphasize non-monetary incentives.  Studies have shown that you can obtain a greater increase in productivity through the use of non-monetary recognition items (merchandise, plaques, life-style items, etc.) on a dollar-to-dollar basis than by using only cash to increase productivity.  Or, at the very least, combine non-cash with cash awards.  In a recent study of team motivators, more than half of the respondents say cash works best when combined with non-cash incentives such as recognition programs, training and development, promotions, and changes to more desirable (usually more challenging) assignments.  Many other studies have shown that employees find the most meaningful incentives to be things that have no cost at all, starting with a personal or written thanks from one’s manager for doing a good job.

Raise the level of awareness and skill on the part of managers in your organization to make a more frequent use of such no- or low-cost incentives within work groups, and within individual jobs.  Autonomy, flexibility, visibility, involvement in decision making, interesting job assignments, and extensive information/communication can all be used with great success to help obtain extraordinary performance from your staff.

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