I read a book by Charles Handy titled Understanding Organisation and in one of the chapters he explained motivation using motivation calculus. That got me thinking about how businesses drive performances through incentives.
I realised that most businesses offer two types of incentives:
- Fish-Net Incentives: These incentives are advertised as added packages for joining the business i.e health care plan, car loan etc.
- Performance Incentives: These incentives are put in place to motivate employees so as to achieve business goals.
Businesses pay little attention to how performance incentives are structured and applied to achieve its goals. Not all businesses subscribe to this type of incentives but a lot of the ones that do assume financial incentives as the ultimate motivating factor to drive performances.
Also, businesses have the habits of coming up with random, not carefully thought and stereotypical incentives when trying to drive performances. To make it worse, the incentives are based on few people’s fantasies and then applied to the whole workforce.
The idea of incentives being used as one size fits all is counter-productive. This practice is based upon the principle that employees behaviours are driven by rational and logical motivation, that is financial incentives as the ultimate motivating factor.
For instance, if majority of the people in a team nurse the idea of getting a professional qualification. A financial reward that is not proportional to paying for the course would do little motivation or deliver expected result when compared to offering to pay for the course or offer proportional financial reward.
Another example, employees working long shifts and well paid but few holidays are less likely to be motivated by financial rewards than a week paid holiday even if the financial reward is more than the week paid holiday in monetary terms.
In large organisations, its common practice to have standard incentives that comes with being an employee of that organisation (Fish-Net Incentives). These incentives (package) is a contract between the employee and the organisation which is not correlated to the performance of the employee or that of the organisation.
So in essence, theirs a need for incentives to be multi-layered based on motivation factors across businesses when driving performance through incentives. The performance incentives should be divided into two:
- Standard Business Performance Incentives
- Departmental/teams Incentives (Smallest unit in the business)
The focus of this article is driving performance by understanding the motivating factor of the target employees. A dynamic departmental/teams incentives based on motivating factors of teams would be more beneficial when using incentives to drive performance.
In a well structured business, a competent team manager should have an idea of what motivates his/her team members. It is not enough to assume the motivating factor of team members is driven by Maslow’s hierarchy of needs but understanding the immediate factors that would breath new life into the team which in turn drive performance of the people and the business.
In summary, businesses should alter their approach of using static incentives with the hope of driving performance.
Just because one dog jump at cat food does not mean every other dog would do the same.
Alphaola's Blog 