Many businesses use productivity incentives, but do they actually work?

Well, quite frankly – in a world were skill, experience and motivation are the key actuators in performance, it’s unlikely. Where it does have a benefit, it’s hard to prove and usually isn’t very significant. The ratio of productivity to incentive doesn’t seem to be very much, and the correlation coefficient will be erratic.

Now, give me my money

Bonuses do motivated for a while, but there are many shortcomings. If it’s late, not enough, withdrawn, doesn’t satisfy expectation or is in some way offset by a negative experience unrelated to it – its benefit is destroyed. If you do it once, it’s is expected again and again. Then, when a decision is made to move away from an incentive – those who benefited from it feel neglected, lost, hard done by and more importantly; they feel that they are now supposed to work less.

Those who don’t realise the direct benefits of incentives – ie those not earning through performance; feel left out, downgraded, disrespected and more importantly they feel – “well, I’m not getting paid more so why should I work harder?”

Incentives don’t last

An unobserved fact about incentives is that they don’t last. Let me clarify: even if the incentive is still administered – eventually it’ll be the norm to be paid an extra £100 per month. It’s no longer an incentive – it’s a deterrent. If I don’t work hard enough, the money I get will be taken away. So, the positive nature of an incentive is mutated in to the negative nature of a deterrent.

When they do create an increase in performance, they mask any other facilitators of development. Good coaching, great training and awesome leadership get confused and can’t be pinpointed. When the motivation derived from incentives build skill and experience – you then start paying bonus for no reason – your now highly skilled worker could perform just as well without the bonus; yet you’d never know. Your hands are tied so you can’t take it away, and they’re still stressed under the pressure to keep earning.

Time to normalise

Reciprocal normalisation is the response to an action that reflects the original action’s nature. Whereby, a positive response is elicited by a positive action, and a negative resonance for a negative action. Transferring to a paradigm that takes advantage of reciprocal normalisation reverses causality, also transferring obligations. Instead of the business being obliged to reward productivity, the employee is obliged to be more productive.

Potentiality is the way forward

Although incentive causes problems when attached to productivity, it can be used for other aspects of a working relationship. Instead of incentivising productivity; incentivise potentiality. This means rewarding those that have the potential to be highly productive – leaving the true productivity factors to be address more effectively with coaching, training and relationship building.

Someone who arrives on time, stays at the workstation and doesn’t have days off sick all the time has much more potential to be productive than someone who is never at their desk, wakes up late and who’s grandma dies every two weeks for 3 years.

This frees up your time to really focus on analysing skill sets, the dynamics of workflow management and ergonomics.

Giving bonuses for being on time, being at your workstations or not being absent is great.
Those who don’t receive their bonuses are highlighted and replaced if changes aren’t made – and as an added bonus the bane of management [shrinkage control] takes care of itself.

Happy workforce

Free of worry, about if they can earn their bonus, staff can become much more introspective and managers don’t have to fight a barrier of ‘bonus depression’ every month.
It’s a big change

I know the above recommendations might sounds ridiculous, but change often does. Waves will be caused, risk will rear its ugly head – but once you’re there, you’ll never go back.
Your big earner, change his pay and say, “right, you’re no longer getting a bonus – that extra £100 that you get every month anyway – is now in your wage”. The pressure comes off and now you’re free to work on focusing on skill – not effort.

Be warned though. By making these changes, you’ll expose any floors in coaching, mentoring, training and leadership – and if you don’t fix them, all the changes will have been in vain.