incentives | Behavior Matters!

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Once is Not Enough – Incentive Communications Need a Campaign

words an numbers over a group of people working at a table
Four Steps to Communicating Incentives

There is an old adage in advertising that says, “people need to see an ad seven times before they are influenced by it.” What does this mean for your incentive programs?

While advertisers may argue about the exact right number (I’ve seen some say that it takes 20 times – really, that seems overkill?), the concept that multiple views of information drives behavior has been shown to be true.  This is called “effective frequency” in the advertising world. 

In our internal communication world, we call it a communication campaign and organizations don’t use campaigns as often as they should. In the world of incentives, a full campaign can be a fantastic tool to add to your toolbelt.  

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Engage your reps with stories, anticipation, and graphic recall

Presentation on a laptop on a table with hands and text
Whiteboard videos can provide up to 15% greater retention of information

Telling your “incentive story” with video creates greater engagement, higher recall, and an overall increase in IC plan knowledge.  

If you’ve seen the Academy Award-winning movie, Schindler’s List, at the mention of the girl in the red coat, you can probably recall the specific scene I’m referring to vividly. This singular scene often stands out as the most revered and remembered scene in the movie. If you have not seen the movie, it is a black and white film yet in this specific scene there is a little girl walking through a crowded ghetto in a red coat.  

Little girl stands out in a red coat amongst a crowd of black and white soldiers
“The Girl in the Red Coat” is a fantastic example of vivid visual storytelling

Her red coat stands out vividly in comparison to the black and white coloring of the rest of the film. It captures our attention and draws our eyes to focus our attention on her. We follow her among the throngs of people and watch as she comes in and out of our view.  

So what does this have to do with incentives?

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Want to earn more and win more awards? Ask for better communication.

Hand raised with fist on white background with text and rocket icon
Make sure you have the tools to climb to the top

It’s no secret that as a salesperson you want to win.

You want to sell, to be on top, to surpass your target, and to join that award trip. You want to be rewarded for the hard work and sales that you bring in. 

But that can be hard to do if your company isn’t telling you what you need to do to win. Companies often spend significant time and energy designing those metrics and fall short when it comes to communicating them to you. This puts you in a tough position between your intentions and the outcomes of the plan.  

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Better Communication Means Higher Sales for You

Don’t let poor communication impact your incentive pay

You are out there every day working hard and selling to your customers – shifting with each change that is thrust upon you and dealing with the uncertainty that has come with these trying times.

It can be stressful, it can be challenging, but you believe that what your company does is important and that you are bringing value to your customers. 

In return, you deserve to be fairly rewarded for growing your business and helping the company succeed. And yet, when you get your quarterly bonus check, it is less than ideal. This shouldn’t happen.

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Sculpting Motivation – Maximizing your Total Rewards with Behavioral Science

This article highlights the key learnings from Kurt’s presentation at the “2020 World at Work Spotlight on Sales Conference”. The original slide deck is available below.

Man screaming into phone exhibiting bad sales behavior
Rewards Programs are a Key Driver of Sales Behavior

In 1937, paleontologist Gustav von Koeningswald was working on the island of Java in Southeast Asia, searching for new evidence of our early human ancestors.  To achieve this goal, he needed to find fossils, and the apex of fossils was the skull. With an intact skull, paleontologists are better able to distinguish between ape and human. 

But skulls were rarely are found intact. 

Instead, paleontologists needed to piece together a multitude of small skull fragments in a complex 3D puzzle.  It was difficult work – difficult to find all the pieces and difficult to fit them together in the right way to reform the original skull. 

To help alieve the burden of searching and finding the skull pieces, von Koeningswald enlisted the help of people from the local village.  He did this by giving them an incentive. He paid them 10 cents per skull fragment that they delivered to him.   

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Improving performance in uncertain times using non-cash incentives

Change creates an emotional response

Even in the best of times, companies experience different competitive and environmental factors that can lead to organizational change and thus employee uncertainty. In hard economic times, those changes occur at a much greater pace and employee uncertainty can be even greater.   Employee uncertainty creates a number of challenges for organizations as employees often feel anxious, disillusionment, disappointment, confusion, and even anger over their lack of control in an unknown situation.  This often leads to decreased employee motivation, focus and subsequent decreases in productivity and performance.

Companies can employ a number of different mechanisms to help recharge employee motivation in changing environments.  One key mechanism is the use of targeted incentives to help engage employees and focus them on improving productivity.  Because incentives can be structured in a number of different ways and use a variety of reward options, it is important to understand what aspects of incentives will drive the greatest return given the uncertainty and emotional response that is felt by employees during these organizational shifts.

Understanding the psychological response:

The emotional response of individuals to potential negative changes is theorized to go through a process similar to grief.  The Kubler-Ross Reaction to Change[i] cycle shows how employees typically flow through recognized stages when faced with change.

Kubler Ross Change

Initial denial is followed by resistance, then a period of self-doubt and worry, followed by a time of letting go, with acceptance of the change and exploration of options, and finally moving to new commitment and focus.  This is an emotionally charged process that requires time to respond to change.

Organizations need to be able to manage this process and move people through these stages as quickly as possible.  The engagement of the emotional elements of the brain is vital to being able to achieve this. During the high stress, denial and resistance stages, our brains do not process rational arguments as easily or readily as they usually do.  In order to gain a foothold in this emotional cauldron, incentives need to have an emotional hook.  Non-cash incentives achieve this hook through a variety of behavioral economic principles.  First, they provide hedonic luxury escape which is about being able to remove yourself from the current state and imagine yourself with a luxury item or good[ii].  Second, they activate different sectors of the brain associated with visualization (i.e., right hemisphere brain functions) versus the more rational sectors associated with transactions (i.e., money and left hemisphere brain functions)[iii].  Third, non-cash elements do not push employees into a calculative modality in which they equate effort with monetary amounts.  In stressful situations, this calculation is short-changed and often interpreted as “they are trying to bribe me.”  Non-cash awards are evaluated as a separate, non-financial component that is viewed in isolation and not in factors that are associated with other compensation factors.[iv]

Examples:

Many organizations have utilized non-cash incentives in periods of uncertainty and change.  The following are just a few examples of these incentives and the results that they generated.

Y2K Angst

A technology firm out of Des Moines, Iowa was experiencing high levels of turnover and angst with its software programmers because of the uncertainty surrounding Y2K and how their jobs were going to be negatively impacted.   A non-cash incentive program aimed at achieving specific Y2K milestones was implemented across the organization.  AwardperQs (a non-cash point system) were awarded to individuals and teams that achieved specific milestones.   This program provided clear focus and motivation for the software programmers and achieved in excess of 90% of employees engaged/ participating/hitting one or more milestones.

Sales Force Integration

A leading medical technology company was moving from a product-centered sales philosophy to a customer-centric team approach.  This involved a realignment and adjustment to the sales force that created significant uncertainty in the field about their jobs and roles.  A six-month incentive program was developed that rewarded people for sales that required integration of two or more product groups.  A fixed award pool created a sense of urgency and engagement in the incentive.  The client realized a return of more than 300:1 on this program.

Realignment

A pharmaceutical firm was going through a major realignment of territories and product allocation due to a large product soon to come off of patent.  Many sales representatives had new managers, new doctors and new products that they needed to work with.  A short-term team based award was put in place that offered teams the chance to earn from selected merchandise if they were in the top 20% of districts across the nation.  Quota achievement across the division came in above the stretch goal, even with the distraction of realignment.

Other Factors

Obviously there are other factors that influence how quickly organizations move their employees through angst to engagement in situations that are stressful or uncertain.  While this paper does not expand upon those, two key factors that relate to incentives include:

  • Incentives should be short-term to allow for readily available goal progress particularly when dealing with uncertainty.  By providing short-term incentives and tracking to that, individuals will achieve a sense of progression towards goal which increases the perception of certainty in the program.
  • Communication is key.  Incentives cannot be viewed of as a bribe or they will be summarily dismissed.  The tone and narrative of the communication needs to be set up to have the most positive impact and create a separate interaction with the incentives that sets it as different from the cause of the uncertainty.

[i] Kübler-Ross, E. (2005) On Grief and Grieving: Finding the Meaning of Grief Through the Five Stages of Loss, Simon & Schuster Ltd.

[ii] Kivetz, R. (2010) Rewards Hierarchy and Hedonic Luxury, presentation at BIW Forum

[iii] Jeffrey, S., (2006) Cash or Hawaii: The benefits of tangible non-monetary incentives, dissertation

[iv] Jeffrey, S., (2008) The benefits of tangible non-monetary incentives, Incentive Research Foundation

Are you spending more on office cleaning than staff motivation?

There was a recent blog from HRZone UK that claimed, “Blog: Most employers spend more on office cleaning than staff motivation.”  I cannot vouch for the accuracy of this statement or info in the article.

That being said, accuracy is not the point.  The point is, you get what you pay for – right?  So what is it that your organization is paying for?

How is your company spending its money?  Is it on it’s people or on systems?  Is it on sales or is it on customer support?  R&D or discounts to suppliers?  The money often points to where the focus is for your company?

Two things that I often do when working with companies trying to improve their employee motivation is 1) interview key leaders to understand what the key drivers of the business are and 2) conduct a total rewards audit.   I use step one of this process to get at the underlying drivers of the business.  This often isn’t the first thing that comes out of leaders mouths.  In fact, it usually requires me to probe with them to really get at the root cause.  This understanding of the key drivers is vital to being able to motivate the appropriate behaviors and performance.  What we find in step two of this process is that the company’s Total Rewards are NOT in alignment with the key drivers.  In other words, companies are often spending their money on things that are not key to driving their success (similar to the clean office analogy in the HR Zone article).

This is not a good way to spend money.

Hopefully your company isn’t doing this.  But a simple way of finding out is to look at where you are spending money and then seeing if that aligns with the key drivers of the business.  If it aligns, you are doing well, if not, you have a problem.

Here is a link to the HR Zone article if you care to give it a glance: http://www.hrzone.co.uk/topic/managing-people/blog-most-employers-spend-more-office-cleaning-staff-motivation/119615

Have a great day!

Changing Behavior – The Real Reason Motivation is Important

I’m a pragmatist.

This means that while theory is nice, what is really important is what happens in real life.

Most of the time when clients hire us, they hire us because we can impact the bottom line through changing the behavior of their employees.  Most of them don’t care about the theory behind that change no matter how wonderful it is (e.g., The Four Drive Theory of Employee Motivation) – what they want is results.

Which gets me to the point of this post – if we are really about changing behavior, why do we care about motivation?

Think about it – motivation in and of itself does not change anything.  You can be motivated and pumped up and rearing to go and still not accomplish anything.  I’ve been motivated for years to loose weight – yet up until a few months ago, I haven’t done anything about it.  In their book, “Change Anything” Patterson, Grenny, Maxfield, McMillan and Switzler (the guys from Vital Smart who wrote Crucial Conversations and Influencer) talk about how motivation is just one aspect that is required to achieve personal change.  Indeed, they talk about the fact that if all we have is motivation, no matter how much it is, we are most likely headed for failure.

To drive change we also need to have the skills, tools and knowledge necessary to achieve that change.  We need to have a social network that supports us in our change efforts and isn’t trying (actively or passively) to derail that change.   We also need an environment that helps us and doesn’t hinder us.  In other words, motivation by itself is not enough.

Yet…

Motivation is vital to this whole equation.  It is the impetus to get us off our butts and start doing something.  It is the pressure that is applied to us throughout the change process – the pressure to continue and not quit when it gets tough.  It is the internal drive and fortitude to keep going and keep pushing oneself.  Without motivation, no change would happen.

And that my friends, is the reason that motivation is important.

Repost: Are we inadvertently setting up our incentive programs to fail?

goal

Do we dream too much about our goals?

A recent post on PsyBlog outlines the distinct difference in performance between people who “fantasize” about future success and those who “expect” future success.  The blog article was based on research by Oettingen and Mayer (2002) in which they concluded, “Positive expectations (judging a desired future as likely) predicted high effort and successful performance, but the reverse was true for positive fantasies (experiencing one’s thoughts and mental images about a desired future positively).”

The PsyBlog article explains the difference between expectations and fantasies as follows: “Expectations are based on past experiences. You expect to do well in an exam because you’ve done well in previous exams, you expect to meet another partner because you managed to meet your last partner, and so on” while “fantasies, though, involve imagining something you hope will happen in the future, but experiencing it right now.”  The difference might seem small, but in fact, had a big difference in outcome.  People who had high expectations about finding a job did much better in actually finding a job than those who just fantasized about finding a job.  See more results here.

Which leads us to our potential problem with incentive programs.

Do we end up communicating to everyone that they can achieve the highest payout or reward?  If we do, then does that lead to fantasizing about the reward instead of expecting the reward?  I’m not sure.

On one hand, I know that in the communication work that we do, we typically use examples and highlight top earners – the ones who achieve in the top 10% of participants.  How does that communication play with the 50% of participants who are in the bottom half of earnings and probably will not achieve that level of success?   We show pictures of what people can buy with their earnings – a new boat, travel to a tropical island, new coach bags, a 62 inch t.v.  Are we inadvertently leading these people to fantasize about what they can do with that extra $20,000 when they don’t have the history to expect that they’ll ever earn it?

Companies often use annual reward trips, short-term contests or non-cash incentives that reward the top 5% or 10% of performers – do these by their nature create a split between those who expect to earn them and those that just fantasize about earning them?   Does this then lead to poorer performance by those who just fantasize about winning them with no real expectation of actually winning?

This is just one study, but it resonates with other information on this subject from Locke and Lathum; Badovick, Hadaway, & Kaminski; and Bandura to name a few.   So what does it all mean?

Are there solutions for this besides just chucking the entire incentive system out the door?

Of course.  When we take a holistic approach and think about this differently.

A few ideas that would help include:

  • When communicating incentive plans, make sure that you provide examples of what average performers can earn as well as top performers.
  • Highlight realistic increases in performance when using now and then comparisons – don’t make the growth so great that it seems unrealistic.
  • Communicate specific actions that people can do to achieve the desired performance level.
  • Make sure that you have opportunities for people to earn something at various levels of overall performance.  Don’t just reward the top 10%.   Hang a carrot out there for people in the bottom 50%.
  • Utilize tiers when creating contests or incentives if there are large differences in average territory size / market share / potential.
  • Include different measures – not just top line sales (e.g., % growth, new account growth, market share, etc).
  • Offer opportunity for sales people to self-select their goals (within specific guidelines) and provide different rewards for them based on the goal they pick.  For instance, you could say, if you pick a 3% growth goal you earn $X, if you pick a 5% growth goal you earn $XX, and if you pick a 8% growth goal you earn $XXXX.

While we all like to dream, we might need to ensure that our incentive programs offer a little more grounding.

So what do you think – is this all just ivory tower research that has no application in the real world, or is it something that we need to take into consideration?  Let us know your thoughts and leave a comment.

How using a 9-iron isn’t the answer to a 540 yard par 5 – just like incentives aren’t the only answer to employee motivation

The Approach

A few weeks ago a number of factors all convened so that I spent 5 days playing 99 holes of golf (see here).  It was fun, but I’m ok if I don’t hold a golf club in my hands for a little while.

Let’s preface by stating that I’m not an avid golfer nor am I a very good golfer.  I’m average.  I usually get out 3 to 4 times a year.  I can talk the talk, I do some things well, and others not so well.  One of the things that I was doing well during those five days was hitting my 9-iron.

And I was hitting it well.

On a pretty consistent basis I was hitting the ball between 140 and 170 yards with my 9-iron – and they were mostly straight (which is a big deal for me).  And once* I put one out there about 185 yards (*it was downhill and the wind was behind me).  Put this in perspective, according to Brent Kelly at About.com the average men’s 9-iron distance is between 95 and 135 yards.  You would need to move up to a 5-iron to reach the average distance I was getting with my nine.

Of course I was hitting most of my other clubs poorly.  I’d top my driver and it would bounce out 30 yards.  I’d slice my 3-iron into the trees.  I’d hit my five iron, but it would fade left and only go about 100 yards.  I’d totally duff my 3-wood.

So what did I do?

I ended up just playing with my 9-iron and putter.  Honestly.  It didn’t matter if it was a par 3 140 yard hole or if it was a monster 540 par 5 – I’d pull out my 9-iron and shoot.

And you know what…I played better than I usually do.  We used many of my shots in the scramble competition.  I won my head to head match.  Overall, I did pretty well using just my 9-iron.

Therein lies the problem…

I did pretty well for me – but I definitely wasn’t one of the top golfers playing.  Sure I did better than I usually do, but I know that using my 9-iron on a long par 5 is not the optimum solution.  Yes it improved my game – but I wasn’t going to be able to match the top golfers I was playing with if I only used two clubs.

I often see companies that use incentives like I use my 9-iron.  It becomes the only club in their bag.

Therein lies the problem. 

We find that we have some success with an incentive program/reward program/new initiative and we think, “hey, we’re doing pretty good here.”  Then we use the same thing again and again – regardless of the issue we are trying to address.  The problem is that using that approach, we will never be at the top of our game.  We will never be able to fully motivate and engage our employees.  We will get to the equivalent  of a 540 yard hole, which requires a creative new approach – and we pull out the “9-iron incentive” instead because, hey, “I can hit it 170 yards.”  But that probably won’t ever get you a par.  And it certainly won’t get you an eagle.

There are a number of clubs that we have to use to help drive motivation.  We need to engage people with challenging jobs, build great interpersonal connections, create a culture that people are proud of, make sure that people have opportunities to grow and excel.    But these are all harder to master, take longer to build, and have a higher probability of a major slice or hook – so we too often just fall back on the old faithful 9-iron incentive plan.

The Driving Range

So I need to go out to the driving range and start working on my other clubs – maybe starting with the 8-iron and moving down the line**.  That is the only way that I will ever improve my game and become a “good” golfer. 

The only way a company will ever become really good at motivating its employees is to start developing their skills with other methods of engagement besides incentives.

We can look at the 4-Drive Model of Employee Motivation and know that we have to engage people in bonding, learning and defending as well as in acquiring.

Get out on the proverbial driving range and see what works for you.  Add a little more job rotation.  Change the goal setting system.  Maybe some more team building.  How about a more open and communicative culture.  It takes practice.  It takes time.  There will be a few shots that go in the water…but in the end, its what is required to become a scratch golfer or a great company!

(**Of course, I think I’ll take a few more weeks off from golf to fully recover…I mean 99 holes in 5 days is a lot!)

Let us know what your favorite club is – leave a comment!

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