Awake at 2 o'clock?

Continuing the discussion on employee incentives.

We have four possible combinations for incentives, monetary/group, monetary/individual, non-monetary/group and non-monetary/individual. How can we determine which incentives will work best?

Sometimes the answer is trial and error. There are many good reasons to change incentive programs regularly, not the least of which is the “Hawthorne Effect.” That is the seminal behavioral study on office lighting and productivity that showed lighting levels were not as important as having the employees know someone was paying attention to their productivity.

To start with, however, you can make a pretty good guess at the type of incentive that might work by the personalities attracted to the position.

Salespeople, for example, are not usually team players. If my territory is New England, I’m not likely to get excited about a bonus that requires the salesman in Chicago to make his goal in order for me to collect. (If you work with salespeople, you’re probably smiling right now at how silly such a program would be.)

So salespeople, for the most part, are incented by individual rewards. But that doesn’t automatically mean monetary rewards. Money is the way of keeping score, but many (if not most) salespeople are motivated by the win, and the recognition that comes from winning. Millions are spent every year on recognition for salespeople. Contests, trophies, trips to sales conferences. Some sales incentives come in the form of more work! How many salespeople have busted their hump for a bigger territory, or to be given a more lucrative line?

There is a behavioral study (it might be Russell Ackoff’s but I’m not sure) that tracks a salesman’s “non-compliance” factor. It goes like this:

You have a set of standards for your sales employees. They re to dress a certain way, submit call reports, get expenses in within 2 weeks or forfeit their reimbursement, be at the sales meeting every Monday at 9:00, etc. All your salespeople follow the rules, more or less.

One sales person starts to see exceptional results. He is hot, and his sales are not only number one in the system, but he’s an order of magnitude better. His call reports start to go missing. (Hey, they’re buying, aren’t they?”) His expense reports are late (“Do you want me doing paperwork, or selling product?”) He shows up in loud plaid sport jackets (“My customers like to be able to pick me out in a crowded trade show.”) He is late for the Monday morning sales meeting…making an entrance while talking to a big prospect on his cell phone.

Do you slap him down? Of course not, and he knows that you won’t. That’s why he’s doing it. He may like the money, but his drive is for recognition, and if it isn’t built into the system to his satisfaction, he’ll find other ways to get it.

As I recall the study, the behavior is self-correcting on results. If the salesman cools off, the closer he falls back into the rest of the pack the more compliant he becomes. No coercion is necessary, especially if another alpha dog is rising in his place.

Remember that all individual incentives are a form of recognition. That’s why you are supposed to publicize them. Don’t make the mistake of telling someone “Don’t tell anyone else how large your bonus is.” That’s precisely the point. Incentives are an updated version of the eons-old custom of preening and strutting in front of the crowd. Removing that component just wastes your money, and no increase in the cash amount will make up for it.