It's a famous story:
In a Soviet nail factory, leaders wanted to improve the performance of workers. When they paid workers for the total weight of nails produced, all nails became bigger. When they paid workers for the number of nails produced, all nails became smaller.
Many of us have first-hand experience with incentive schemes sending companies off a tangent, or even backfiring on their people's productivity. It's no surprise because most managers use rewards incorrectly.
Do rewards motivate people? Absolutely. They motivate people to get the rewards.
- Alfie Kohn, Punished by Rewards
Rewarding people based on just one measurement usually does not improve the organization's performance. But is it wrong to incentivize people? Well, not if you first focus on intrinsic motivation, and then on extrinsic motivation. With extrinsic motivation, we refer to behavior driven by external rewards (given by others), such as money, grades, and praise. With intrinsic motivation, we refer to behavior triggered from within a person. In other words, the person is rewarding herself.
You would do well to take the following rules in mind when thinking of your next rewards program:
- Don't promise rewards in advance.
Give rewards at unexpected times so that people don’t change their intentions and focus on the reward.
- Keep anticipated rewards small.
You cannot always prevent people from anticipating rewards. But this may be harmless when the rewards are small.
- Reward continuously, not just once.
Every day can be a day to celebrate something. Every day is an opportunity for a reward.
- Reward publicly, not privately.
Everyone should know what work is appreciated and why. A regular public reminder works better than a private one.
- Reward behaviors, not only outcomes.
Outcomes can often be achieved through shortcuts while behavior is about hard work and effort.
- Reward peers, not just subordinates.
Peers often know better than managers which of their colleagues deserve a compliment.
One good practice that seems to satisfy all these rules is the kudo box or kudo wall. With this practice, you get people to offer each other tokens of appreciation, either by posting them in a box or putting them on a wall. At Google, they call them gThanks; at Zappos, they call them WOWs. I know companies that use names such as the Shout-out Shoebox, Thank-you Box, and Rippas (in Australia, of course). Regardless of the names, workers give each other a physical token of appreciation (usually in the form of a thank-you card) for a job well done. Optionally, management can make small gifts available to those who received a kudo card from their peers. The practice satisfies all rules for rewards: nobody knows who gets rewards or when, the rewards are small, offered continuously, publicly, for healthy behaviors and great outcomes, and workers can even reward managers if they want.
Incentives often go wrong. Before you burn your hands on extrinsic motivation, it's best that you focus on people's intrinsic motivation and the 6 rules for rewards. You can't go wrong with a kudo box or kudo wall. A personal thank-you note is a great reward for every worker.
Check out the following slide deck if you want to know more about rewards, incentives and the kudo box:
Also on Forbes:
