• Sunday, March 03, 2024
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BusinessDay

Do Your Company’s Incentives Reward Bad Behavior?

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It should go without saying that the best way to get the behaviors you want from your employees is to provide rewards for doing them. The flip side is that you have to make sure you’re not inadvertently providing rewards for behaviors you’re trying to discourage.

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.

First, make a list of behaviors you want more of and a list of behaviors you don’t want. The importance of responding honestly to this assignment cannot be overstated. For example, you may say you want a culture of quality, safety, and transparency, but do you really? Or do you believe that this is an unattainable, unaffordable goal?

Next, make a list of the behaviors you are currently measuring. Then compare each of the behaviors on your “more of” and “less of” lists to the list of behaviors you’re currently measuring. Put a circle around the behaviors you are not now measuring. This is your danger list! If a behavior you care about is not being measured:

+ Your employees are likely to conclude that it isn’t very important, and will act accordingly.

+ You aren’t able to provide skills training or feedback about the behavior, so how can people improve their performance even if they want to?

+ You aren’t able to reward the people who are doing what you want. Nor can you penalize people who are not doing what you want.

The third step is to determine whether your rewards and penalties support your espoused values. Ask your employees what would be most likely to happen to them if they engaged in certain behaviors. Offer four possible answers: “I’d be rewarded or approved,” “I’d be punished or discouraged in some way,” “There would be no reaction of any kind” or “I wouldn’t know what to expect.”

Research shows that employee perceptions of rewards systems tend to degrade as you go lower in the organization. People in executive positions are more likely than those at the bottom to feel they’d be rewarded, or at least not punished, for raising uncomfortable issues.

(Steve Kerr has served as the chief learning officer and head of leadership development for both General Electric Co. and Goldman Sachs. He is the author of Reward Systems: Does Yours Measure Up? from Harvard Business Review Press.)