In a previous post, we discussed the challenges that can occur for organizations, and teams within organizations, when incentives aren’t properly aligned.
The top-down mandate to take some kind of action won’t be met with sufficient enthusiasm and drive if the “doers” aren’t as motivated as the “commanders.”
Understanding this is important, but just how do you go about aligning incentives? Here are some tips that might help.
Clearly Communicate the Objectives and the Priorities
One problem many organizations make in aligning priorities—let alone incentives—is that they don’t clearly communicate them from the top down in the first place. Managers might push for certain activities on an ad hoc basis, but they don’t let their teams know how those activities fit into the bigger picture and why they’re important. The same is true at the organizational level.
An effective way to communicate priorities is to set team or corporate goals. These goals let everyone see the big-picture objective, as well as put smaller, contributing efforts into more perspective.
“Goals should be directed at employees at all levels, so they should be clearly defined in plain English and free of convoluted business jargon,” according to Creative Business Resources (CBR). “They should be ambitious enough to excite employees, but must be attainable and not intimidating. Goals should contain specific metrics so employees are able to discern exactly what is expected of them.”
In terms of aligning incentives, there are two broad buckets: positive and negative. Positive incentives reward people for doing something, while negative incentives punish people for not doing something or punish them for doing the wrong thing. Positive incentives are great at helping communicate priorities and aligning incentives between groups and individuals.
For example, if the company goal is to reduce costs by 10% by the end of the year, find ways to reward employees who contribute to cost-saving efforts. Rewards could be financial, but they don’t have to be. Rewards might be recognition and opportunities for advancement.
The key is to give employees a reason to contribute other than being told to do so and to make that contribution valuable to them relative to their existing work.
For a number of reasons, negative incentives are generally not as effective as positive incentives; however, they are worth discussing here, as they can be effective in the right situations.
A negative incentive could be something as small as privately reprimanding an employee for not putting sufficient effort into working toward a particular goal. It could also involve more drastic steps like removing privileges. Again, these types of tactics generally reduce morale and should be less favored than positive incentives.
In order to make sure all levels of the organization are in step with their priorities, it’s important to ensure they share the same incentives. This doesn’t necessarily happen organically. But the communication strategies shared here can be readily implemented to help make it happen.