Culture Chat

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Are Your Incentives Undermining Your Culture?

Are Your Incentives Undermining Your Culture?

March 14, 2018
Charlie Judy

Incentives seem like they should be easy to set up and manage: Identify a goal you want your employees to reach, establish a reward for achieving that goal and watch them get after it. But as with so many actions in the workplace, unintended consequences can crop up if the program isn’t well-designed.

You might remember Wells Fargo made headlines for an ill-fated incentive program that rewarded employees for creating accounts — inspiring them to create 2 million fake accounts without telling customers. More recently, United Airlines rolled out an overhauled rewards program that essentially created a lottery system for rewards — and hastily pulled it back because of the outcry.

Organizations make the mistake again and again of not taking the time to truly understand and consider the implications of their actions. Are your incentives undermining your culture? Here’s how to know.

Yes, If They’re Rewarding the Wrong Behaviors

By definition, incentives are meant to drive a particular behavior. The message behind an incentive is “you’ll be rewarded for doing what’s important to our organization’s success.” If it’s effective, it’ll drive more of that behavior than you would see without that program. But if you define that behavior at too superficial a level, you’ll see unintended consequences.

It’s your company’s responsibility to define that behavior. If you’re trying to build incentives around “increasing sales,” what does that mean? If employees interpret it as increasing sales at any cost, in any way, with little regard to friendly fire, your culture will likely take a hit (a la Wells Fargo). Go beyond “increase sales” to describe the context, details and specific results of the behavior you want to reward. Give it color, context and narrative. But most importantly, focus on the driver, not the outcome. In this case, “increased sales” is the outcome. Define which distinct behaviors are going to drive that outcome; define those behaviors at a level even the casual bystander can understand. And then measure and reward those behaviors first. By the way, what drives increased sales for your organization might not drive increased sales for your neighbor’s organization. So you have to start with what works for you.

Yes, If They Were Developed Top-Down

United’s incentive program clearly came as a surprise to many of its employees. The program was missing a lot of things, but the most important one was obvious: Employees clearly weren’t asked for their ideas, and an incentive program that excludes perspective and feedback from employees is doomed to fail.

Your employees are the ones who live your culture — and who share it with your customers. They’re doing the work, so they should help design your incentive program. In a way it’s like developing software — you want the end user to have input. Work on different parts of the program at a time, get them right, then ask for feedback on how it’s working. If you don’t involve them, employees will see right through what you’re trying to do.

Yes, If You Don’t Revisit Them

Your culture is constantly changing, even if it’s well-defined. Employees also change as they gain experience and tackle new challenges. As a result, your incentive plan should be flexible as well. If you’re rewarding behaviors your company valued a year or two ago, your culture will be stuck in the past.

Revisit the plan often to ensure it’s matching up with your current culture and business goals. The world of work is fluid: How is it lived out in daily experience? What’s having an impact, and what isn’t? Everything you say reinforces and clarifies the importance of the behaviors that drive your business. If something drives your success and you want to reward it, own it and reinforce it.

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