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Managing Individual and Team Incentives, Expectations v. Reality

Courtesy of: https://www.precheck.com/blog/how-boost-healthcare-employee-performance-incentive-programs

I recently started the fully employed MBA program at University of California, Irvine and one of my personal objectives was to write at least one blog a month on the topics discussed each quarter.

As part of a recent discussion in Organizational Behavior, we discussed how to properly manage incentives and I found the text from Jone Pearce especially insightful. I’d like to outline some of the key learnings from her discussion and how they apply to our jobs as managers.

“to effectively manage employee incentives [you must start by] diagnosing which actions really are rewarded in the organization and which actions managers feel should be rewarded” (Individuals in Organizations, Jone Pearce)

Let’s start by understanding the expectations an employee may have coming into a job and we will then discuss how managers can properly address these and assign incentives to motivate the employee and ensure their future success.

Expectations as an Individual:

  1. I will be rewarded for quality work
  2. I will be rewarded for innovation
  3. I will be rewarded for support or team-based activities
  4. My boss knows how I’m motivated
  5. My boss will utilize all of my skills

The expectations outlined above specifically call out desired outcomes from job performance. Jone Pearce points out that employee actions such as joining the organization, remaining at the company and showing up for work are not typically a manager’s biggest concern — it is all in job performance (Jone Pearce, p.110).

Addressing Expectations as a Manager

I will be rewarded for quality work

This is one of the hardest expectations to address with incentives mainly because pay is not based on performance, but it’s based on the labor market. Secondarily, it involves a clear understanding of what you want from your employee in advance and that the employee’s success is completely independent of the work of others. Neither of these are true in most organizations. Instead of relying on solely individual performance to measure quality work, you can also incentivize quality work by tying their performance to organizational goals. Tying performance to the organization allows employees to see how their work is valuable and gives them the ability to understand the milestones or tasks they must complete to drive success in the organization.

I will be rewarded for innovation

Especially in a field driven by creativity, it is important to outline how success will be measured for employees. It’s usually hard to measure creativity, and even expertise, as part of an employees performance because they are raw skills that cannot be easily measured. Yet we don’t want employees to lose interest in their work because their creativity is not directly rewarded. Instead — we can look at motivating them by targeting their intrinsic motivators: what drives them to engage in the work place? What types of tasks do they find rewarding and/or challenging?

I find this especially interesting in the tech industry because often times you are measured in the interview process for your creativity or “out of the box” thinking but that doesn’t correlate with how you’re measured in your ongoing performance. If you are highly creative but you do not perform, your creativity is no longer relevant and your skills are not utilized during your time at an organization unless the manager has the ability to present and promote a creative workplace despite the KPIs given to each individual

I will be rewarded for support or team-based activities

This is a classic example of what an employee expects to be measured on but it is commonly not the reality provided by the manager. Support and team-based activities are hard to incorporate into an employee’s performance because they are contributing to another individual’s objectives. Similarly, individual objectives are usually based on independent activities and don’t factor in the support required — resources, team input, budget optimization, etc. — required to get the job done. Factoring in support or team-based activities is even more important once money is involved — if individual objectives are not tied to team-based activities, financial incentives may cause individuals to neglect their support or collaboration responsibilities.

My boss knows how I’m motivated

This can’t work without open communication, yet many managers don’t address this from the beginning. I recommend starting the conversation as early as the interview process. This is a great way to see if the job would aligns with their motivation (both short and long term). This gives you insight into what they’re passionate about or if they are at a place where they just need a change in their career (or a source of income). Once identified, managers can work to ensure that the work and the process agreed upon don’t stifle their employees’ creativity and sense of ownership. Although some projects may have to align with a specific skill set, managers must be careful to align performance based on the result of efforts — which are often tied to how motivated the individual is to not only complete the task at hand, but go above and beyond to lead a strategic initiative.

My boss will utilize all of my skills

As managers look to hire, grow their team, or even just grow their team’s responsibilities; it’s important to understand not only the skills an individual provides at that time but the potential an employee possesses. Often managers may suffer “tunnel vision” in the sense that they only see the skills relevant to the current tasks, yet there may be opportunities for an employee to contribute to a cross-departmental project or a company-wide initiative based off other skills or developing areas of interest. Many organizations today talk about “growing from within the organization” and this is done by understanding the full potential of each employee, instead of boxing them into the skills required for their pre-existing job description.

How does this affect the marketing organization I contribute to today?

When I think about the challenges we face in our marketing organization, the ability to measure creative or team-based performance are two critical areas I believe we need to address.

Many thought leaders discuss the importance of an integrated strategy approach for marketing. Marketing leaders for each area (programs, inbound, events, content, etc.) work together to develop specific themes and campaigns — it is only the execution that is divided among the groups. Everything else must be done via consensus. This can have powerful impacts on marketing’s success and creates an open environment for brainstorming and creativity, but we also need to ensure this ties directly into how individuals are measured and incentivized during their career. This is a challenging approach and requires leaders to think through motivation of their employees outside of money, because (as we discussed earlier) financial incentives are harder to manage when you’re looking at team or support based activities. Recommended alternatives including tying these group-based activities into an individual’s quarterly objectives, providing opportunities for an employee to gain “status” or recognition by team involvement, or even aligning larger financial incentives to team activities, not just individual objectives.

This is easier said than done, but I believe starting with an open dialogue and outlining the individuals expectations v. the employer’s ability to measure performance will start the conversation. This can lead to better work relationships and improved employee retention as these insights are applied to existing team and individual performance reviews.

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