Using our heads to solve your Reward challenges.
Obviously Bananarama and The Fun Boy Three absolutely nailed this back in the day, but here we are some 40 years later and it is an increasingly important consideration, especially in the world of business and Reward. Put another way, it's not just about the WHAT but also the HOW.
We are seeing more and more organisations focusing on behaviours rather than just outcomes and looking to underpin their bonus schemes with a values-led approach. It hasn't always been that way, but times are changing. Is your business thinking about this too? Let's look at why perhaps it should.
Traditionally, bonus schemes have rewarded people for results, whether their own personal achievements or those of the wider team or company. However, rewarding people solely for results, ignores the fact that those outcomes, positive or negative, are often attributable to other, sometimes peripheral factors - including plain old good or bad luck.
Rewarding just on results can lead to some 'passengers' being paid out when results happen to be good but also great contributors missing out when results are poor.
There is a saying that 'results speak for themselves', but do they?
Most of us are aware of the story of American cyclist Lance Armstrong and all the doping allegations made about him from 1999 onwards while he was busy winning the Tour de France seven times between then and 2005. He repeatedly denied allegations of using performance enhancing drugs for 13 years before finally admitting to cheating during an interview with Oprah Winfrey in 2013. How must his competitors and fellow team mates feel about that? And that's before considering the detrimental impact that it all had on the sport of cycling. This is a clear example of where the outcome has become ruined by his behaviour and not just for the individual himself, but many others too.
Back in the business world, concentrating only on results can lead to short term focus to the detriment of longer-term strategy and also potentially selfish or even unfair practices in the desire to maximise earnings.
Coupled with this, many participants in traditional bonus schemes can also lack line of sight to desired results or have little to no direct influence on outcomes, so there is no driver for them to do anything differently or better.
Rewarding values driven employees for behaviours aligned to company values and disincentivising those who disregard them but still get results will help those values to be embedded into the culture much better than a declaration on posters in receptions, corridors and meeting rooms that may only be paying lip service.
So, is a complete switch from results to behaviour measurements the way to go? Well, yes and no. For some businesses, trusting that the right behaviours will automatically lead to better results, even if not immediately, can absolutely be effective. However, for the majority of organisations, a balance somewhere on a sliding scale between the two is a more appropriate way to go.
Deciding exactly what that balance should be, what hard versus soft KPIs should be used, and how they should interplay with each other through the mechanisms of any bonus scheme is the trickier part for a business to get their heads around. It can depend on so many different factors: ensuring affordability and that schemes pay their way, what journey the business is on and where they are on that journey, how clear their values and expectations around behaviours are, whether it is about driving positive behaviours or simply avoiding negative ones, if they are set up to measure and monitor both types of KPI effectively and appropriately, and so on.
We work with clients to help them understand what works (and what doesn't) and what the art of the possible is around this. We can also support with the thinking around ensuring that any scheme they set up is future proofed so that it isn't just relevant for periods where they may be looking to drive change, but also longer term around maintaining the right behaviours too.
When bonus schemes are arranged solely in support of a pass or fail result, not only may they do little to support company culture, but they may inadvertently harm it. In encouraging improvement by linking those practices and behavioural qualities to the measures needed to achieve payout, businesses can get much more from their bonus schemes, as can the people working for them.
So, if you would like to talk to us about how the Reward Heads team can support you on ensuring that your bonus arrangements are set up the best way for your organisation, then please reach out to either Claire Williams, Consulting Director, or Victoria Milford, our CEO, at rewardsolutions@rewardheads.co.uk
Claire Williams - Consulting Director