Does Your Incentive and Reward Program Focus Too Much on the End of the Game?

I would challenge your hypothesis that incentive plans should focus on behaviors, not results. In my experience, I have too often found that behavior-based incentives are very good at increasing the targeted behaviors, but are not always effective at impacting results. We get the wheels spinning, but don’t always get very far.
If we were incenting on the baseball game, I would expect us to pay for the win, not the final walk. As management, we need to respect that as long as the team followed the rules, a win is a win.
At the end of the day, the business needs results. How we get there is important (and needs to be addressed through performance management and incentive plan language/controls), but should not be the primary driver in a plan.

Heather – thanks for the comment. It is a hard thing to get your head around since we spend so much time talking about getting results.
Justin… I hear what you’re saying. I’m not against results – what I am against is an incentive program that is purely about results. When you use results as your only reward criteria it creates an empty space between the “start” and the “end.” People can only control their behavior – which isn’t a result. As an example – say sales are down for a particular product because the company had a less innovative product. A results only program would not only penalize the sales force – but mask the real problem – innovation. I’ve seen many companies who use the “results” of the incentive program as evidence that sales isn’t doing their job.
Even in baseball, individual positions are rewarded based on their specific “behaviors” (ie: errors, IRA, BA, RBI, etc.) not just “wins.”
If a program is designed correctly there are awards for the steps in the process as well as the final result.
The question then is… using your words – should there be a “primary driver” of an incentive – or should their be various drivers that each have a little different values – that total a successful program?

Michael – thanks for the comment. I agree – measurable and connected goals/behaviors. BTW – Loved the post on pitching – my son is a pitcher and I keep telling him to worry less about the Ks and worry more about contributing on offense and defense as an infielder after he pitches the ball. Two things he can have some control over. Great comments.

While in the past that has been true – more and more we’re seeing individual stats included in contracts. A-Rod has a “home run” bonus and some have weight clauses, etc. It is becoming more common. However, I think we agree and disagree on one thing – I don’t think you should “pay” for the individual steps in a sales process in the traditional sense – but incentives (non-cash) do provide a guiding motivation to do the things that result in sales. Once you cross the line to include pay for all those little things you do set up a weird situation where income can be increased without an increase in sales. In most cases you do want the overall cost of selling something (including pay and incentives) to be less than the profit generated. Just good business sense.