The Incentive/Behavior Nexus

Steve Kerr uses a General Motors cautionary tale to show us that it isn’t enough to have incentives that appear to reward desired behavior. In this HBR blog post, he notes that:

Although managers’ bonuses are based partly on vehicle-quality improvements, and safety is supposed to be paramount, cost is “everything” at GM, and the company’s atmosphere probably discouraged individuals from raising safety concerns. Earlier this summer, a former GM manager described a workplace in which the mention of any problems was unacceptable.

Kerr’s critical insight is that while GM could point to formal quality incentives, these incentives didn’t have the required impact on its managers’ behavior. The money quote for me is this:

In order to properly align its incentives to support its mission and objectives, a company must determine what managers and employees believe they are being encouraged to do and not do.

Top 10 (Bad) Incentive Assumptions

This post from @IncentIntel is timely as we head into silly season: performance and rewards time. I especially liked the two below; communications about incentives are too often treated as a “once and done” event:

3. If the award is valuable enough you don’t need to communicate and remind them of the award opportunity.

5. Top performers don’t need to be reminded of where they stand in the program.

Non-Financial Ways to Engage and Motivate

I hadn’t seen this blog before (here), but I liked this post that compiled tips focusing on non-financial incentives and practices (here).  The suggestion to “establish an appraisal system where clearly defined objectives are mutually agreed” seemed benign enough, but adding the phrase “appraisals should be continuous, not just once a year” put some punch in it.

I’ll need to remember this advice when planning my next round of bi-weekly standing meetings  with my team.

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