Designing incentives – what works?

Sparked by the topic 'Substituting traditional symbols of power and status e.g. corner offices, for new symbols of power and status (and why this matters).' The action learning group I am working turned the discussion into one on performance and motivation incentives. This surprised me a bit as the three questions we'd been posed were:

  1. How much is workplace associated with hierarchy/power/status and is this important to the client's business performance?
  2. What questions and approaches would help us understand our clients' emotions around status/power/space?
  3. How can the workplace support our client in developing a defensible point of view around power/status.

But what they'd picked up on was a line in one of the pre-read articles Is open-plan working really the future for lawyers? Meet the evangelists "Obviously there are firms that have open-plan offices, but it's something that we're reticent to mention early on in the recruitment process. It's not a selling point. I've never met anyone who says that they actually want to move into an open-plan office. Having your own office – that's an incentive."

This type of extrinsic incentive – pretty much the blunt carrots of motivation: office space, spot bonuses, promotions, titles, end of year awards, working from home, access to natural light, etc. led to discussions on whether they had to feel 'fair' – who gets what and why was a thread followed.

This is a huge issue in a company I am currently working with. In that culture discussing your pay and benefits is not a cultural taboo as it is in some organizations. What this leads to is people openly comparing their remuneration packages and the work that they do and then feeling that their package isn't fair in comparison to someone else's. It's a managerial headache to handle these types of conversations in the absence of a clear framework that explains why there are differences. The differences are related to industry sector, market rates, and various other factors which are all explicable but not clearly communicated. (In fact, they are not explained or communicated at all).

In a similar vein, people in the learning set talked about the communication or not of the fairness of incentives. In this case they picked up on job titles and the risk to reward of being awarded the title of Senior Associate or Principal. With the titles come some responsibilities and expectations but it is not exactly clear what these are. 'There are transparency issues and concealment'. People didn't know whether being awarded the title would be a personal incentive or disincentive to their performance. Nor were they clear on what the stick would be for deciding not to accept the title.

Moving on, but keeping with extrinsic incentives, they noted things like 'if you're a known expert user of technology you get rewarded with more up to date stuff', and 'if you're on a special project then you get a room for the project – collaborative space that's yours'. Similarly, in architecture offices 'pin-ups' – boards where work is displayed – are a 'badge of honor' and people felt that it is important to manage these types of extrinsic incentives in a way that is explicable and consistent. They would like to know why whole departments are not visible on the boards and why we choose to celebrate some work and not other.

They pointed out that extrinsic types of incentives are dropped when times get tough – incentives like travel to have face time with a client, training and development, conference attendance – yet they are exactly the types of things that would actually help improve performance in difficult times. See an article A Recession for Perks on this topic.

Then, more intriguingly the conversation turned to intrinsic incentives – the types of things that are individually motivating. Stuff that in the RSA Animate, Drive – on motivation – relate to what Dan Pink calls the incentives of autonomy, mastery, and purpose. Client face time was one of them. This is 'perhaps the most coveted commodity in our business [architecture]. It's a significant currency in the way we work and has a huge impact on individual staff morale.' For any architect or designer being able to meet face to face with the client gives valuable insights. Who gets to this face time, and why, is a topic of interest and speculation.

Other intrinsic motivators mentioned by the learning group were things like access to partner time – again, who gets this and why? The degrees of access people have to certain individuals becomes both an intrinsic motivator and a source of power. In open plan offices the spatial relationships people have with each other can be a form of incentive – proximity to networks and sources of information, for example, can be performance motivators – you get the information you need to do your job more effectively by being able to listen in on what's going on. Someone described this being within earshot as 'purposeful positioning'.

This led to an exchange on team spaces. They appear to be equitable but there are 'zones of high information and low information'. The space around some individuals is 'charged with info'. People talked about some zones which were de facto 'clubs' – getting access to them is an organizationally sensitive issue with 'a ton of complex stuff embedded in space' and it is these 'subtle things that we are not talking about'.

Equally people felt there is an inherent motivation in feeling that you are doing well. People want to be able to make a difference and be involved in successful things. Regular feedback on performance is an incentive for some people (but not others) which led to the point that intrinsic incentives are individually determined. In fact I had dinner with a friend last night and she mentioned she was applying for another job because she felt oppressed by the amount of positive feedback she was getting from her supervisor. It felt over the top to her.

So the discussions on incentives this week have led me to wonder if intrinsic incentives can be designed into an organization and further whether spatial arrangements make a difference to them. This discussion is taken up in an article The Four Intrinsic Rewards that Drive Employee Engagement. Although it implies that intrinsic incentives can be designed into an organization I think that may be up to challenge.

My reward expert colleague thinks you may be able to design in an environment where the intrinsic incentives were able to germinate and flourish without intervention. But he is basically of the view that most organizationally designed incentive programs – particularly those based in monetary gain and extrinsic incentives – have a negative rather than a positive effect. They result in dysfunctional and competitive behavior as people vie to demonstrate the desired behavior to get the award. He is blunt in saying he has never seen an extrinsic incentive plan that hasn't had adverse effects. He'd like to see an organization that has moved from an extrinsic plan to intrinsic plan with successful outcomes. Is that yours? Let me know.

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