Incentive Programs and Professional Motivation
I recall some years ago having read this Joel Spolsky post entitled "Incentive Pay Considered Harmful." In typical Spolsky fashion, he made a very compelling case that I had a very hard time coming to grips with. At the time I'd just recently made a series of contributions to Novell, outside of the scope of my job description, that I felt had an obvious positive impact on the company, but I had not received any sort of recognition at all for this.
Joel's article strongly disagreed with me. I felt I should have been recognized for my efforts; why else would I take the personal risk that comes with extending one's self in that fashion? Instead, nothing had been done.
I've been pretty interested in this topic and so I've been observing and evaluating ever since. What I've seen is that, for the most part, incentive programs tend to have the opposite effect of their purpose; namely, they tend to demotivate rather than motivate.
Outlined below are some reasons why.
People Get Rewarded Just For Doing Their Job
Maybe you've seen this too: You attend a quarterly all-hands meeting when an individual you know and work with is asked to come to the front. They announce, "Tom did a really great job running our beta program last release, and so we are giving him the quarterly Mega-Smiley-Face award, with a free dinner for two and a new iPod Touch." You sit there and stare, clapping insincerely. Sure, Tom did a great job running the beta program. But Tom is the beta program coordinator! It is his job to run the beta program! You did great work with your assigned responsibilities last quarter also. Why aren't you getting an award?
One problem with this scenario is that the rewards program now seems arbitrary. Tom was rewarded this quarter for doing his job. Who will be next? Who knows? Everyone is doing their job, but not everyone gets rewarded. The rest of the people feel discouraged. The recognition seems to be something worth earning, but they don't know how to earn it.
Another problem with this scenario is that it sends the wrong message to the team. Nobody should be rewarded just for completing their assignment — or everybody should be. Tom gets paid a salary for him to do his job. He's expected to do it well. If he gets rewarded just for doing his job, it tells the rest of the team that some jobs matter more than others. How do I get an assignment that matters? they wonder. And why am I wasting my time doing work that isn't important?
Luck and Timing Often Play a Bigger Role Than Excellence
In my nearly 15-year career I've delivered a lot of software to customers. I've invented things, learned difficult technology, solved complex problems, led and motivated teams, and proposed key strategic decisions that have helped the companies I've worked with become more successful. How many trophies do I have on my shelf? One. It is a beautiful blue piece of plastic that I got last summer when the Microsoft division we belong to eclipsed the $1 billion revenue mark for the first time. I'd been with Microsoft about six weeks at the time.
Earning that award (using that word very loosely, by the way) required nothing of me other than accepting a job at Microsoft at the right time. I hadn't written a line of production code yet, and certainly did not contribute to that revenue. I figure it replaces many others I should have earned but didn't.
I'm proud of the award, but I'm the first to admit that I earned it primarily due to fortuitous timing.
Positive Effects Are Usually Short-Lived
I remember one time being on a software team when we realized one morning that we had a serious bug. A problem had been reported by our released product that was having a significant customer impact. One member of the team stepped up to the task of digging into the issue and finding the problem. When he found and fixed the problem later in the day, he was genuinely thanked and given a gift certificate as a show of gratitude from the company.
The following day, our team was in a team meeting when the topic of the previous day's bug came up. We were being asked to identify what we were going to do differently in the future to avoid this problem. The same team member that had saved the team the day before took this as a personal offense. He muttered something to himself under his breath, slammed the lid of his laptop shut, picked it up and stormed out of the conference room.
Clearly, the special effort the company had made to thank him had been completely forgotten in less than 24 hours.
Abuse Makes The Programs Become Meaningless
I've frequently seen well-intentioned incentive programs become so abused that they become a laughing stock. One is almost embarrassed to truly earn an award because so many others have been similarly recognized for awards they acquired through dubious means.
Novell's Employee of the Year kind of took on this sentiment for me after I first saw one person get the award after taking full credit for something I knew full well he did not do (because I did it). Later I saw a colleague, the proven highest contributor on his team, get passed over for this award when his manager instead gave it to the lowest contributor in an effort to motivate him.
Probably the strangest of all of these though is for a company I've heard of with a very generous patent award program. One of their employees has learned to double his annual compensation by filing patent after patent through the company's patent program. Of course, filing all of these patents doesn't leave much time for him to do his regular job, and the patents being filed may not have anything at all to do with the company's products or strategy. But he's so innovative and valuable to their inconsistent patent portfolio that they've had no choice but to promote him over and over.
They Encourage Individualism Over Teamwork
Through a trusted source I heard about a support department for a software company years ago. They had instituted an incentive program called "55 Stay Alive". This great program with such a catchy name was very simple to understand: Each employee had to close 55 incidents each month or they were fired.
Awesome, huh.
One employee made a pitch to management, explaining that the incentive program was very negative and instead suggested they rearrange things to have a single goal that the whole team could work toward together. Management was hesitant but the team was willing to put it to a test.
So they did, with amazing results. Every month the team closed far more incidents working as a group than they ever had working as individuals before.
Logically, management was very unhappy about this insubordinate behavior so they fired the guy.
This might be an extreme example, but you've probably seen lots of examples of this. Many incentive programs reward people for behavior that leads them to focus on individual achievement at the expense of team achievement, which would be much better for the company.
So What Does Work Then?
One of the best incentive programs I've ever participated in was at Novell, working for a manager who ironically was really not that great of a manager. Novell being a Linux company, he had been given a small 6-inch figurine in the likeness of a Linux penguin which we called the Tuxen.
Every so often, in a team meeting, he would recognize someone for a specific assignment they'd done well. Then they would be awarded the Tuxen for a week. Each winner was expected to proudly display the Tuxen and take it places and publish photos of their adventures on the team wiki.
One week I was awarded the Tuxen for work I had done to help start the Eclipse Linux Tools project. I proudly took the Tuxen home with me, took photographs of the Tuxen with my family, and brought it along on a trip with my son to the Las Vegas Supercross. I gave it back a week later, but it was one of the most rewarding recognitions I'd ever had.
When I first read Joel's blog post, I immediately e-mailed him with my concerned, contrary opinion. "So how DO you reward people and make sure they know they've done well?" I asked.
"Just thank them," Joel said.
Maybe you're wondering, could it really be that simple? Instead I'd ask, why does it have to be more complicated?
