Archive for the ‘Incentives’ Category

Innovate and Die?

Posted: September 26, 2014 by Ian Gee in Incentives, Leadership, Learning

innovation

I guess we have all heard the saying “innovate or die!” but I am wondering if there are times when the maxim should become ‘innovate and die’? My thinking about this topic came about as a result of a really interesting chat the other day with Adriana Ramos Hernandez, an MSC student at UCL. She wanted to explore innovation in management and ways of working.   We talked about how the workplace is changing and the challenges this presents for both organisations and the people who work in them. Towards the end of our chat, Adriana suddenly said, “Well, I guess it is a case of “innovate or die?”   Out of nowhere I thought about how innovation may not be the “Holy Grail” and has the potential to either severely wound you and your organisation or may, in some circumstances, even kill your organisation stone dead and lead to you losing your job! In essence, a passion for innovation rather than taking your organisation to the next stage of its evolution becomes something that stops it dead in the water.

 

Anybody who has been reading the papers in the last couple of years will have seen what appears to be a tsunami of stories detailing corporate bad behaviour and business scandals. Here is one recent example; a UK pay day loan company c, has had to pay out over £2 million in compensation for sending out letters to people, who were defaulting on their payments, from a fake solicitors firm. A firm they had in essence ‘made up’. The letters threatened legal action if people did not pay back their loans. They were charging people £40 for these letters; adding the charge to their ever growing debt.  You can read more about it here. Another good example would be the Libor scandals, have a look here for more details. Basically a number of national and international banks and other financial institutions were caught rigging the interbank lending rate and have been fined by regulators sums that run into the hundreds of millions of pounds.

I started to wonder if, before they were found out, did the individuals and companies concerned consider these to be wonderful corporate innovations? Ideas that would have a direct and positive impact on the bottom line and give the company a ‘leading edge’ over the competition? The kinds of innovations people get lovely bonuses and recognition at appraisal time for? The kinds of innovations that other people look jealously on and wish they had come up with?

But what happens when the innovation turns out to be unethical? It is very interesting to read the reactions of the senior leaders to being found out. In the cases mentioned here CEO’s and senior leaders lost their jobs, the chairs of a number of boards lost their jobs and millions of pounds were wiped off the value of the companies involved. In addition and much harder to measure is the impact and damage the scandals have had on their brands. These innovations could literally have killed the companies.

If you do a web search for ethics and innovation what you will find is mostly linked to technological, medical and scientific innovation with very little about the relationship of ethics to organisational or managerial innovation. Of course from an OD point of view we would be looking at issues of culture and values. But I am wondering if in the arena of ethics and innovation there is a gap that we in OD should start to explore and fill and if so how? What do you think?

 

 

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Carrot dilemma

Posted: November 12, 2012 by Matthew Hanwell in Incentives, Leadership, Organization

I’ve always had a bit of a dilemma when it comes to incentives. Firstly and fundamentally as has been widely discussed elsewhere (See Dan Pink) do incentives actually accomplish the desired result, for anything more than repetitive tasks? (Scientifically shown not to) And secondly, when establishing an incentivised objective for someone, are you setting an incentive for the person to do their job, to do their job well (aren’t they paid a salary for that), or are incentives for going above and beyond ‘doing your job’? What incentivised objective would you set for an airline pilot – 100% safe arrival of passengers?

We all like to receive more money, a bonus, but I think a bonus is fundamentally different than setting an incentive that has an associated payment? I personally like the idea that the success of an organization is shared with those who contributed to that success in an equitable way, reflecting the value and significance of the individual or collective contribution. However I believe that organizations struggle with their incentive programs. I do wonder how fair and equitable incentives programs actually are within an organization? Which departments/teams achieve the highest pay-outs? Are these the same teams that contribute the greatest value? Are there any companies where the incentive process and payments that result are totally open and transparent, open to the scrutiny of everyone? Perhaps such transparency would uncover and invoke a sense of fairness, or then not!

In some roles, the measurements used for incentives are clear. Sales incentives most obviously, the sales targets are clear as are the actual sales and hence the rewards according to a known set of rules. I did work for a very successful company which didn’t have a sales incentive program, believing that sales people should not be encouraged to sell ‘things’ that the customer didn’t actually need, more of a trusted partner. When a sales incentive program was introduced, it failed (not alone) to turn around a faltering company, and the rumour was that it cost more to implement than it ever paid out! Do companies implement incentive programs and systems because others have them?

Outside of a work context: giving people monetary (or other) rewards (or threats) for them to ‘do as you say’ may be considered blackmail or at least a form of coercion! Would your employees do their job, and do their job well voluntarily, without the need of that incentive? Do incentive programs drive employee engagement, or do incentive programs amount to organizational bullying?

In my experience including incentive schemes within a Performance Management process leads to a significant skewing of the performance management process. The focus shifts to the incentivised part of the performance, the parts that will potentially earn an additional reward, and not on the overall contribution that someone has made to the organization. But this takes us back to one of my dilemmas – Should incentives be set for doing your job.

I wonder why organizations set up Individual incentives! This can divide an organization and inhibit the collective and collaborative culture and environment, especially when the goals and objectives of each individual are not known or poorly, or not aligned. In large complex and dynamic organizations it must be near impossible to maintain a coherent set of objectives. Is the effort of trying doing more damage than the value it is creating? I think I would focus on creating unifying objectives, that require (at least encourage) collaboration and cooperation for them to be accomplished? Perhaps organizations can learn from professional sports teams in this.

I liked the bonus program of my first employer (many years ago); it was simple, clear, open, and tied to the value (revenue) created. As a first time line manager it was easy to administer; I didn’t have to set objectives, no individual incentives and no complex and/or subjective criteria; the team understood what the work was, when a bonus would be achieved, for doing what, and how much it would be (2% of the revenue generated). They could even choose by themselves to hand-over the revenue generating work (and the bonus) to another team member – without any approvals from me. And performance reviews focus on how well you had done you job.

And to conclude: are incentives and incentive programs being used to coerce employees into to at least appearing to be working on activities and having objectives that support the organizations strategy? Aren’t there far more powerful ways of motivating employees?