Recently I saw someone on twitter asking about incentives and if anyone had past experience with incentivizing work. I promised to respond with some of the experiences I have had in the past so here goes...
**Disclaimer** - these are my experiences with incentives, generally in software development - in some other industries this may not be applicable – this is also my thinking at this point in time, with more experience my opinion may change.
Incentivize at the level that you want people to group at
If you are wanting to promote a team mentality, incentivize teams. If you want to promote an individual mentality, incentivize individuals. There is nothing worse than mixing this up. Some organizations put a lot of effort in establishing teams and team mentalities but reward individuals. This has a counter effect on the resources they have put towards establishing a team mentality.
In the software projects that I work with we want promote cross functional teams that collaborate. Personally, if I was on a team and knew that there was an opportunity to work on a critical component of the system, and that by doing so I would get a bigger bonus, then I would be hesitant to include other people in solving that problem. Thus, I would hinder the teams efforts in being cross functional and reduce collaboration levels.
Does that mean everyone in the team should get an even share of an incentive? In most situations I would say yes - even though this may feel counter-intuitive. I have heard arguments put forward that if “person x contributed more than person Y then they should be rewarded more” – This may sound controversial but I would rather treat people how would you like them to perform, not where they currently are at. To add to this approach, if someone is free loading, you bet your bottom dollar that the team is going to make this a lot more transparent if they feel that individual is going to be rewarded at the same level that everyone else is.
Bad incentives promote destructive work
If you are going to incentivize people, pick you incentives very carefully. I had an experience once with a sales person who was told they would get a bonus provided that they met an ordering target with a particular supplier. What did this person do? They sold everything at cost for the next month or so. They reached the goal, but the company didn't gain anything from it. It was a bad incentive.
Expect the same with development teams, if you incentivize zero bug levels, you will get zero code committed to the solution. If you incentivize lines of code, you will get many many lines of bad code.
Is there such a thing as a good incentives?
Monetary wise, I am not sure there is. I would much rather encourage organizations to pay their people what they are worth upfront. I would also advise against paying money to teams as an incentive or even a bonus or reward for reaching a milestone. Rather have a breakaway for the team that promotes team building as a reward if they reach a milestone than pay them more money.
I would also advise against making the incentive the reason for them to reach the milestone. If this becomes the norm it promotes people to begin to only do their job if there is an incentive at the end of the line. This is not a behaviour one wants to encourage. If the team or individual is in the right mind-set, they should not work any harder than they are right now with normal pay.