Perks Incentive Blog

Recently Bnet.com – usually a good source for information to help you manage and run your business – ran an article called “Why Bonus Plans Don’t Motivate Employees.” The author –you can see his bio from the article – isn’t an expert on incentive program design. He has, however, been involved in incentive programs in the past.

His sum total of experience in program design is that he’s been part of incentive and bonus plans before. And while that might be enough experience to form an opinion, it would be ill-advised to base your company policies on his input. There is more to motivation, and the design of incentive programs, that drive performance than simply being part of a program in the past.

The big issue with this article is:

He lumps performance and incentive programs using non-cash awards into the compensation discussion. It is a common mistake, and can be forgiven, but no one who understands how compensation and non-cash incentives address very different performance issue would make that grouping.

The rest of his “rules” or reasons why bonuses don’t work are pretty spot on, if an exercise in stating the obvious. But by starting out comparing compensation-based bonuses and commissions to non-cash incentives he shows he really doesn’t understand the difference. And there is one.

Commissions/Bonus/Compensation

Your compensation strategy relative to pay – whether salary or variable – is designed to allow employees to live, work, buy a house, go to dinner, manage life maintenance chores. Done well, most employees will give you what they think that package of value is worth to them. Less compensation – less value to the employee – the lower the minimum standard of performance will be. Compensation is transactional and fungible. Meaning – the employee will do some calculus in their brain when they evaluate a compensation system and compare the money to the work – and then compare that equation to another offer/company/position. There is no emotion in that process. It’s cold, hard, transactional and impersonal.

Non-Cash

On the other hand – once you’ve established what you think is the value exchange for “minimum standard of performance” – which is what compensation really is – you know need to find ways to drive incremental discretionary effort. And that is why you need non-cash incentives and recognition. That creates an emotional, social relationship with the employee. The employee can’t do the same math in their head. What’s a recognition “event” worth in money? Who knows – like the credit card commercial says – it could be priceless if done correctly.

Don’t confuse compensation with connection

Many people who give advice in the incentive and reward space confuse the issues of compensation and the issue of connection. It is easier to deal with life if you believe people only have one gear – money – and that gear should always be engaged to get the best work.
The truth is – like your car you have many different gears – all influenced by different things.
Next time you want advice on incentives – come to us.

GOOD ADVICE (Part 2)

In our next blog post, we will give you the good advice that the author of the subject of this post, unfortunately, didn’t deliver. Next up, 10 THINGS TO CONSIDER WHEN IMPLEMENTING YOUR INCENTIVE PROGRAM.

Stay tuned, for the next installment.

Powered by Bookmarkify™

I told the kids to do the dishes while I cleaned up the kitchen. Before I knew what was happening, they were dashing back and forth between the dishwashing machine and the cabinet, making a terrible clatter and calling out numbers.

“Ten!” Lily yelled, stopped and pointed at her younger sister. “No fair! Silverware doesn’t count!”

“Yes, it does! It counts! You have to go just as far to put it away,” Helen said, a bit of exasperation in her voice.

“No, it doesn’t. A spoon doesn’t count as much as a plate.”

Helen frowned and puffed a little air to get her hair out of her face. “It should count double. You have to go from the dishwasher to the cabinet and then open the drawer. That’s one more step than just putting away a cup.”

Lily paused, looking at her. She appeared to think it over. Then she shot toward the dishwasher and grabbed a fork. Helen was right on her heels.

“What the $@!&% are you two doing?” I think I omitted the H-E-double toothpick. I hope I did. But I was thinking it.

“The dishes.”

“Uh, no, you’re not.”

Helen looked at me, cocked her head, and held up a coffee cup. “Yes we are, daddy. Look!”

“I mean the running. The numbers.”

“It’s the dishes game, daddy.”

“Can we just do the dishes without the running? The yelling? You’re gonna break some china they way you guys are jumping around.” I looked at the silverware tray in the dishwasher. “And when you start on the cutlery, you’re gonna kill yourselves.”

They dropped their heads and turned back to the chore with far less enthusiasm.

The incident started me thinking.

Back when I was fresh out of high-school, I worked on a farm for a summer, digging post holes. Not real exciting work, but the pay was great – for an eighteen year old – and I had a “company” car, a sweet beige El Camino that I drove for the summer. But if you’ve ever run a fence-line, digging post holes, it’s deathly dull work, despite its strenuousness. My “partner” was Jim Stevens. Everyone called him “Bo.”

It took maybe a single day before we made a game out of it. The game was this: we’d both start digging and after an hour, we’d see how many post holes we’d each have – the loser bought lunch. Or beer, after work.

By the end of the summer, both my back and triceps were a solid mass of muscle and our boss was amazed at how many miles of pasture we’d fenced in. In the interim, we kept our minds – and our friendship – stimulated.

And that’s the deal. Humans are creative, inquisitive creatures. We like puzzles, we like figuring out the roots of things. It’s in our nature to want to make games and competitions of our endeavors.

How does this relate to incentives?

According to Incentive Research Foundation, incentive budgets have declined since 2008, but they are now tentatively rising. This is important, because in these lean years, incentive program managers have to find ways to motivate and engage their audiences without expanding their expenses. And so comes an interest in gamification.

In simplified terms, gamification is using game mechanics – accrued points, badges, levels of “experience” – to incentivize target audiences by creating a token economy. This economy is based on three things (check out how similar it is to current incentive and engagement psychology): first, there needs to be a specified target behavior; second, there are tokens that can be exchanged with material reinforcers; and third, back-up reinforcers, which are the services, the goods or the privileges that the tokens can be traded for. (A.E. Kazdin : The token economy: a decade later. Journal of Applied Behavior Analysis, 1982. http://tinyurl.com/3c76ovj)

This bolsters the current thought underlying incentive trends and online incentive solutions. Perks.com, being at the forefront of the incentive and engagement field, is paying close attention to these developments.
Games like FarmVille and MafiaWars are burgeoning on Facebook. Game inspired geolocation social network services like Gowalla and Foursquare are surging in popularity. As the fabric of your life becomes more meshed with your smart device, gamification will begin to inform many aspects of your day-to-day life.
Whether it will be checking in on Foursquare ten times in a month at your local eatery to receive a discount, or employers implementing a badge system or token economy for top performers in their company, fostering their desire to excel, to succeed – technology is changing the way we look at engagement and motivation.

Please request a demo and let us show you how we’re changing the game.

Powered by Bookmarkify™