Group/Individual Level

Facilitating structures - Reward systems and performance indicators

Background
The best motivation and reward systems are able to create conditions conducive to meeting both the firm's goals (i.e., for productivity, profitability, or success, however it is measured) and the individual's goals (i.e., for satisfaction, motivation, challenging work, money or whatever the individual values and needs). In this way, people will be motivated to achieve the goals of the firm, while they are naturally motivated to achieve their personal goals. Various achievement reward and recognition programs have been shown to be successful in firms such as IBM, 3M, Proctor and Gamble, and Eastman Kodak (see Peters and Waterman, 1982, In Search of Excellence, New York: Harper and Row, for more information on these examples).

There are several general principles of motivation that have been found to work across thousands of different settings, situations and individuals. They are particularly important when dealing with innovation and technical change because these processes quite frequently require people to go beyond their limits. By definition, innovation and technical changes are above and beyond the traditional limits of routine operations and the steady state of an organisation. Extra special attention must, therefore, be given to these basic principles:

Reinforced and rewarded behaviours tend to be repeated. That is, if you do something and then receive a reward very soon after doing it, the likelihood of you repeating that behaviour is increased. The implication is that if one of your employees does something innovative, or very helpful to the technical change process, and you quickly reinforce that behaviour, the likelihood of that behaviour being repeated by that individual and others, is increased.
Rewards and positive reinforcement are more effective in motivating people to perform a certain way than are punishments. Punishments should be avoided.
Desired performance and goals should be clearly formulated and communicated. If people do not have a clear idea of what is expected of them or toward what ends their behaviours should be directed, there is very little chance that they can perform adequately.
Feedback on performance is absolutely necessary in order to be able to guide behaviour. There is an old saying, "If you are driving with your eyes closed, you are bound to hit something, 'cause that's the way it goes." If people have goals and priorities set, and if they get frequent, timely, and accurate feedback regarding their performance in relation to the achievement of those goals, then they have the necessary requisite information with which they can guide their behaviour.
There is a great distinction between a need for training and a need for motivation. If you provide one when the other is necessary, it will not work. If a person does not have the skills necessary to do a job, raising their pay or giving them some other forms of recognition and rewards, will not solve the problem. Conversely, if someone is well qualified to do a job, but is not adequately motivated, providing them with more education or skills may not solve the problem either.
Rewards should be provided not only at the very end, once the ultimate goal has been achieved, but incrementally whenever people are seen to be making significant progress toward the ultimate ends. This reflects the fact that people need rewards and reinforcement more frequently than they usually get them. Although the regular pay cheque may be considered a frequent reinforcement, it is most usually not directly tied to specific behaviours. Encouragement and many other non-monetary forms of reward and recognition have been shown to be very powerful motivators if provided frequently and tied to specific, valued behaviours.

Motivation versus manipulation. Many people confuse motivation with manipulation. Motivating work environments are characterised by an appreciation of the individual and individual differences, by reward systems that consider individuals' varying needs, and by close links between effort, performance and rewards. Manipulative environments disregard the individual and individual differences, they motivate by fear, they employ motivational gimmicks imposed on people, they are overly paternalistic, they do not base rewards on factors under the control of individuals, and they are not based on trust, confidence and well defined and communicated performance expectations. Considering ways to best motivate ourselves and our employees for the good of all of those involved is a very different thing from trying to manipulate someone into doing something that is not in their, or anyone's, best interest.

Motivating innovation in managers. Considerable research has been devoted to identifying the factors that are most important in motivating innovation. The following three groups of variables have been shown to be important when trying to motivate people and groups toward innovative performance. Innovative performance, in this case, is defined as the number of new ideas adopted, success in meeting pre-established goals, adaptability/change orientation, commitment, and overall senior management perceptions of innovative performance. The three groups of drivers and barriers to innovation identified were (1) task-related factors, (2) people-related factors, and (3) organisation-related factors. These were identified as the major factors affecting innovative performance as the result of a of 360 new product managers in 52 high technology companies in the U.S. (Thamhain, 1990).

Task-related factors. These are factors such as (1) setting clear objectives, directions, and project plans, (2) providing proper technical direction and leadership, (3) autonomous control and professionally challenging work, (4) matching the individual's personal interests and capabilities with work tasks and responsibilities, (5) having experienced and qualified project/team personnel, (6) individually negotiating roles, requirements, responsibilities, etc. with a qualified and interested person before giving them the job or making them a member of the group, and (7) encouraging team involvement and project visibility.

Organisational goals related to the innovation project must be clearly communicated, well understood, and regularly updated. People must know why the innovation is wanted and for what purposes it will be used. This helps build a high visibility for the project, gives it priority in people's minds, and makes for interesting project work.

Although the physical work environment does not need to be fancy, it must reflect the professional level and needs of those involved. The physical work environment must facilitate, not inhibit, the conduct of work tasks and functions.

People-related factors. These are factors such as (1) personal work satisfaction, (2) mutual trust and team spirit, (3) good communications, (4) low unresolved conflict and power struggle, (5) low threat, fail-safe, good job security.

Team building must be addressed. Individuals working on an innovation or technical change project together must be good at working together. There must be a free flow of information in all directions both formally through meetings, reviews, and information sessions, and informally via personal contact. There should be low levels of unresolved conflict and power struggle. This leads to more cooperation, better communication, personal work satisfaction, trust, and team spirit. Although you need not look at high levels of conflict, in general, as a negative (in fact many people who study conflict in organisational settings argue that conflict is very healthy - it stimulates innovation, creativity, and action), high levels of unresolved conflict are frequently detrimental. Finally, people are free to be maximally innovative and creative when they are in a low threat, fail-safe, environment with good job security. Without this, people are less innovative, less creative, and less free to experiment and take risks.

Organisation-related factors. These are factors such as (1) organisation stability and job security, (2) sufficient resources, (3) involved, interested, supportive management, (4) proper rewards and recognition of accomplishment, (5) stable goals and priorities.

Of course, for any individual or group of individuals to be fully creative and able to take the calculated risks necessary to innovate, there must be sufficient resources available. People can not be worried about "How can we get this done if we don't have the time/money to do it right?" There must be involved, interested, and supportive management who provides the motivation, the visibility, the resources, etc. There must be proper rewards and recognition of accomplishment. With extra efforts must come extra rewards. Otherwise why would people bother? While monitory rewards are important, they are not the only important reward issues. Lastly, there must be stable organisational goals and priorities. This provides the framework within which the creativity, innovation, and flexibility can flourish, yet be guided in useful directions.

Thamhain, T. (1990). Managing technologically innovative team efforts toward new product success. Journal of Product Innovation Management, 7, 5-18.

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