The frequent requests on HR can make pros cranky. Those often caught in the crosshairs are...
Quick money is the stuff of dreams, right? With MegaMillions offering a jackpot of $490 million (as of the date of this blog), the possibility of Easy Street excites more people. There are those regulars who will play each week for the chance to win $40 million, but once that pot multiplies, lots more people become interested enough to play. Dreaming of what that win will do to life is enough to motivate. Of course, $40 million is nothing to sneeze at, but statistically, we’re a people that need high stakes to inspire us to action.
When incentive plans are developed in organizations, this kind of human drive is forgotten, or at least, minimized. About ten years ago, Hammond’s Candies used to incentivize employees to find cost-cutting measures in production. Within a short time period, ten employees provided either real improvement ideas that were implemented or actual cost of goods reductions. The company was thrilled at the response. Hammond’s Candies paid out $500 for all 10 of those implemented ideas that saved the company thousands of dollars. For those not as quick with math, that means each of the 10 employees received $50. Guess how many new savings ideas were offered after this first crop?
Asking for innovation should inspire people. Consider first, however, the environment. Does your work environment foster such creativity? If it’s a brand new idea, work with a small team of cross-sectional staff to define this new opportunity and how it will function. It’s okay to have a couple of ringers at the onset to create a tone for what it should look like. Staff will respond more favorably if they have an example of how innovation and creativity are defined.
If compensation is going to be offered (lean towards it should), be kind and reasonable. Saving the organization $4500 annually might be worth more than $50. And while the savings may seem small to you (in comparison to the company’s overall budget), it is not small to the employee who spent time considering how to help. What would 10% of that savings as an incentive really cost? It wouldn’t. Allow the incentive to align to the impact. It’s not necessarily true that 10% should always be the factor, so you can have a sliding scale or some levels of incentive offering. Work with your cross-sectional team to help define this area, too. Having buy-in will ensure its launch and its participation.
And be sure those involved have an understanding of budgets, savings…numbers as a whole. You may have to explain some of the “basics.” Don’t assume everyone is working from the same point of reference. One of my favorite scenes from Arrested Development involves Lindsay, Maeby and Michael Bluth:
Lindsay: Ok, I tell you what. I'll take you down to see Nana if you split the money with me 60-40.
Michael: Sounds like you guys are getting more than you think.
It is good to explain why someone saving the company $4500 should not necessarily get that $4500 (if you do offer that, great, but there could be other reasons not to do that). Truthfully, this may be the first time someone is exposed to a P&L and to budgets. Embrace the opportunity to explain kindly.
Remember, too, that these ideas are not merit-based incentives. Someone having a stand-alone idea for savings or improvement does not mean that the same person is performing consistently in the main areas of the work to be done. Reward the idea and its implementation. Save merit increases for an overall work review.
Innovation is a value to the organization. Rewarding it is appropriate. Incentivizing it poorly will constrict creativity as quickly as its encouraged. These ideas are not likely to put an employee on Easy Street; save that option for MegaMillions.
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