ARE YOU GETTING YOUR INCENTIVES RIGHT?

by Paula on July 8, 2013

Wherever I go, be it school, work or various clubs, I hear the word “INCENTIVE” being used. But what does this actually mean?

Dictionary.com defines it as:

“Something that incites or tends to incite to action or greater effort, as a reward offered for  increased productivity.”

Incentives

Interesting that it says “incites or tends to incite” already casting doubt that in some cases incentives aren’t working. I’d like to give you three examples below of incentives that I’ve come across, showing what the intention would have been, and what behaviour they are actually resulting in.

1. In the office

Managing Director:

“It is a problem that a third of the staff are submitting timesheets late as I am unable to cost jobs accurately. I have been reading up on incentives and I’d like you to work out how I could offer a cash incentive to these people in order to get them to do them on time.”

Intention of this incentive: To get staff who are late with timesheets to submit them on time.

Actual result if this were implemented: Staff who are currently late with timesheets may or may not start submitting them on time. Staff who submit them on time will feel highly disgruntled that one third of the company is getting payment for doing what they already do. These staff will then either a) feel very demotivated and annoyed or b) start not handing in things on time in order to get on the “naughty list” and then get paid for what they used to do without fuss.*

2. In the classroom

My son’s school (as most schools) has a house-point system with a chart on the wall to show how many house-points each child has achieved.

Intention of this incentive: To encourage children to try hard, achieve well and demonstrate good behaviour.

Actual result of this incentive:

  • Housepoints are given for children who try when they don’t usually, who behave when they don’t usually, who do something well when they don’t usually. 
  • Housepoints are rarely given for children who behave all the time, do good work all the time, are high achievers.
  • Children who don’t often try, or behave, or achieve are rewarded when they do (very positive!)
  • Children who do try, behave and achieve daily are at the bottom of the score chart, feel like they are not doing well, start to wonder if it’s perhaps better to be naughty or not make an effort….

3. Purchasing insurance or broadband for the home.

Take any insurance or broadband company and they will have fabulous offers for new customers. Too good to be true prices, discounts for first few months, added extras etc.

Intention of this incentive: To get clients! They are specifically focusing on bringing in clients on a special offer in the hope they will then not notice when they next year prices increase dramatically.

Actual result of this incentive: They do indeed get new clients, but these clients are savvy and are taking the offers because they are searching for new deals. There is absolutely no loyalty from client to provider so after subsidising that new client for a year they then move on and take a deal somewhere else. For the past 10 years I have swapped backwards and forwards between two insurance companies as both of them can do fabulous deals to win me over but very little to keep me.

INCENTIVES ARE GOOD!

This is not remotely a blog about incentives being a bad thing. Far from it, they are indeed very successful at provoking changed behaviour. However, as the examples above demonstrate, it’s very important to think through what effect this might have on not just those whose behaviour you want to change, but on those who are already behaving as you wish them to. Getting it right can bring everyone on board, getting it wrong can leave you in a worse place than when you started.

*For the record, this was the only one of the three that I could actually influence. Instead of the cash rewards path, what we actually did instead was to take a three-step approach. 1. Educate clearly the important of timesheets and why it matters for them to be in on time. 2. Have deadlines and clearly explained consequences of non-compliance. 3. Ensure consequences are followed through. 

Step 1 was successful for part of the people as they just hadn’t realised the importance before. Step 2 ensured we were able to carry out step 3. Then when we did need to carry out step 3 and people realised we were not messing about, timesheet submission improved dramatically with only the occasional slip. And the M.D. saved his money too. :-)

 

Previous post:

Next post: