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Dangle a carrot in front of a horse and he’ll pull the cart faster. Set down a bag of oats and a team of horses will come running. It doesn’t take more than a month in an HR office to figure out that incentives work pretty well on humans, too.
If HR professionals want to change and sustain employee behavior, they need an incentive plan. Nearly every company can benefit by providing workers with recognition, bonuses or gifts in return for increased productivity. What makes this challenging is that HR managers have to create a system that works with the company culture they already have, so they can move toward the culture they want.
Collaboration Leads to Innovation
Individual incentives are good in situations where there are clear performance expectations, such as production environments where minimal interaction among teams is required and tasks are autonomous and repetitive. But successful organizations are highly innovative, and innovation requires teamwork for the development of new ideas. Team-based incentives create, as well as emphasize, the need for collaboration across the company.
Such incentives benefit organizations by being:
Moreover, group incentives create stronger bonds among teams. Individuals have less desire to work the system when rewards primarily come from working together. Teams will want to keep their eyes peeled for recognition opportunities via performance, and that makes stretch goals more likely to be reached.
For a look at the numbers, a joint study by the International Society for Performance Improvement and The Incentive Research Foundation found that “Incentivized teams increased their performance by 45 percent; incentivized individuals increased performance an average of 27 percent.”
-----------------------------------------------------------------------------Incentivized teams increased performance by 45%;incentivized individuals by 27%.-----------------------------------------------------------------------------
Beware the Red Flags
Although team incentives can lead to heightened performance, the HR department needs to make sure they’re properly implemented to avoid the following hurdles:
Remember, team incentives fail if individual incentives are layered like a cake. Most people prioritize the individual incentive over the team one every time, if only because they have more control over the outcome. The point is collaboration; so incentives must be designed to reward the group.
HR managers must be vigilant in making sure that what they want is supported by the incentives they offer. Seek and evaluate feedback from team members to check that your rewards are working to unify the team and that they remain directly and visibly linked to the company’s strategic intent.
Andrew “Drew” C. Marshall is the principal of
Primed Associates, an innovation consultancy, and a contributor to the
Innovation Excellence blog.
Related SHRM Articles:
Use Compensation to Inspire Innovation,
SHRM Online Compensation, December 2012
Incentive Compensation Tips and Pitfalls,
SHRM Online Compensation, June 2012
HR Magazine, February 2007
Finding the Right Method for
SHRM Online Compensation, December 2004
SHRM Online Compensation Page
Salary Survey Directory
Compensation Data Center
Metro Economic Outlook reports
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