Incentivizing Innovation – Part 2
I am on the topic of how to incentivize innovative behaviour in organisations. In the previous article it was highlighted that this is not such a straightforward matter as one might think and that it is imperative that organisations must first create an environment, or a culture, that fosters innovation, before just going the “cash for ideas” route. Hence, in this article, I want to look at the link between organisational culture and incentives for innovation, and also share some ideas on how to encourage innovative behaviour through other means than monetary rewards
So the premise is that an incentivizing mechanism on its own doesn’t do much good. It must be a part of a broader innovation program which includes training, management and rewards and recognition. You will notice that I use the terms rewards and recognition, so what is the difference then? In my view, recognition applies to the emotional side of being incentivized for good performance, and reward refers to something tangible that is offered as incentive, i.e. money or a prize. However, I also view these two concepts as being intertwined – when you give a reward, it’s because you are recognizing someone’s effort. When you are being recognized – there is some action that is taking place in order for this to happen. That action is the giving of the reward. Employees who receive rewards and recognition get satisfaction from both.
There is a lot of psychological theory in terms of types of rewards, e.g. intrinsic or extrinsic rewards, tangible or intangible rewards, etc. There is merit in these distinctions and it is certainly true that financial rewards drive some people to exceptional performance, whereas a simple “thank you” can make other people run through brick walls for their organisations. It is not the purpose of this column to go in depth into psychology, and I am not saying you have to be a psychologist to figure out and incentive scheme for driving innovation in your organisation, but it is a good approach to have a proper understanding of what motivate your employees in the context of your organisation’s culture, and align incentives for innovation accordingly. Asking a couple of in-depth questions, doing a bit of research or employing an expert, will not hurt in figuring this out. So let me list two ways of incentivizing innovation through other means than monetary awards, which I found very helpful, as proposed by Kevin Daum from Inc Magazine.
Help them learn. Smart, ambitious people need mental stimulation. If they feel stagnant they will get distracted and perhaps search for another company that is mentally stimulating. They want to be challenged, and exposed to new ideas. Give your innovators the first opportunity to access training materials, try their hand at new techniques, and practice advanced skills.
Say thank you. Achievers thrive not only on their accomplishments, but also want to feel appreciated for what they contribute. Anyone who shows improvement, solves a problem, or exceeds a target is justifiably proud of what they have accomplished. They want to know that you are proud, too, and that you appreciate their effort. Public recognition through awards and acknowledgement helps them understand they are valued on the team. It is easy to send a brief thank you email or make mention at a weekly meeting with a personal comment on their accomplishment and why it matters. A public awards wall with noticeable achievements rewards those who excel and motivates those who are looking to be recognized.
I trust that the last two articles shed some light on the topic of incentivising innovation. It is different for each organisation, granted, but there are basic principles that can be applied that will increase the chances of motivating the desired behaviours for innovation. Also, try to keep it simple and straightforward. It has been a while since I touched on the topic of creating the right culture for innovation in the organisation, the topic for next time. I conclude with a quote from Abraham Lincoln: “Don’t worry when you are not recognized, but strive to be worthy of recognition”.
Daum, K. 2014. 5 Ways to Reward Great Employees Besides Money. Online: http://www.inc.com/kevin-daum