• Don't use money to try and shape behavior or boost performance. It rarely works. If you think it has in the past, what happened when you took the carrot away? No doubt, performance slipped and you were left with stimulus-dependent people looking for progressively bigger carrots. Unless people feel compensation and bonus systems are a major block, leave them alone.
  
  When you do need to review or adjust your financial rewards, get the people you're compensating involved. They should give you feedback on your current approach and improvement ideas. Ideally, they would design and own the compensation system.
   
• Keep reward programs simple and direct. Everyone should easily understand them. They should also see a direct connection between what they or their team does to serve customers or partners and their compensation. That argues for shared or self-managed teams operating in a decentralized structure. We've found that simple three-tiered compensation systems work well: (1) personal, (2) team, division, or plant, and (3) corporate profit sharing. Base the rewards on an open-ended percentage of earnings, not performance to a budget or projections (that just invites game-playing at budget time).
   
• Whose needs are your recognition and reward systems designed to serve? What are the goals? Are they to manipulate, control, and "motivate?" Or do they build an atmosphere of helpfulness, appreciation, and high energy? How do you know? As with beauty, quality, or customer service, reward and recognition are in the eyes of the beholder.
  
  So get all your partners involved in designing meaningful reward and recognition systems and practices for each other. Involvement can happen through combinations of gap analysis, focus groups, teams that study and recommend, or teams that design and implement the reward system.
   
• Get clear about what is to be rewarded and recognized and by whom. Move management out of the role of deciding who gets rewarded and recognized for what behaviors. Work with your partners to blend customer/partner input with your team or organization's vision, values, purpose, strategic imperatives, and improvement goals. Set up systems, programs, training, and provide a personal leadership example that gets customers and partners involved in giving frequent recognition and appreciation to each other.
   
• Make sure there's a good balance between rewarding and recognizing both current performance and improvements. People who do well today but aren't improving won't help your team or organization get better. Anyone who's not continually improving will become a liability.
   
• Don't set up competitions for limited rewards — unless teamwork isn't important to you. Fear of failure and losing doesn't create energy. Find ways to meaningfully recognize and energize as many people as possible.
   
• Avoid suggestion systems. They reward people for lobbing ideas at others to implement. They work best in a paternalistic culture where they reinforce traditional management control rather than shared or self-management.
   
• Don't use promotions as a reward. People should only be put into larger leadership roles because they have demonstrated the capacity, vision, values, skills and so on for ever higher levels of leadership. Using promotions as rewards puts an unhealthy focus (and competition) on position, rank, and titles as a means of measuring worth. It also sets the promotee up for resentment and failure in his or her new position.
   
• Traditional performance appraisals are dangerous and detrimental to performance. They rarely work. That's why organizations are constantly changing them. Why are you doing them? If it's to manipulate and control behavior, you're paying a big performance price to indulge this fetish. If it's to develop people, replace appraisals with frequent performance discussions and coaching based on 360 degree feedback.
   
• Separate compensation and performance discussions. They serve two different (and often opposing) purposes. Over 85 percent of the factors affecting individual performance are in the system, process, or structure of the organization.
   
• Build jobs around people. Align good people with what they like to do and what needs doing. Helping people to grow, expand, and move to new challenges and opportunities are some of the best ways to show sincere recognition and genuine appreciation for their improvement efforts.
   
• Keep measurements, improvement progress, and recognition highly visible. Use scoreboards, bulletin boards, voice mail, electronic or printed announcements and the like.
   
• Recognize and reward both individuals and teams.

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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."