Incentive schemes, good or bad for quality?

There’s a good article on isixsigma about how a US Army Garrison, in an attempt to garner acceptance and enthusiasm for their Lean Six Sigma projects, has offered personnel an incentive for making suggestions on work related improvements. That is, if they make a suggestion that ultimately leads to an improvement to a demonstrable level of $2600 or greater, they get a day off work

That strikes a cord with us. As, many, many years ago, as a keen young management trainee, we were asked to perform a review of our organisation’s staff suggestion scheme. It was a pretty simple job, actually, as nobody we asked was aware of it, and there had not been a single suggestion for 14 years. Digging back through the archives we noted that the scheme dangled pretty small rewards, described in the vaguest and most non-committal terms, and the suggester was barred from making suggestions about anything to do with their own immediate job (the argument being that they were paid to do that in any case). It would seem that the suggestion scheme was disabled by design, and this was subsequently borne out by inactivity. Soon afterwards we began working for another organsation that did allow suggesters to make local improvement suggestions, it publicised the results and the scale of the rewards. Some of the rewards ran into the thousands. The scheme was quite well used, surprisingly, and it put us firmly in the “make it worth their while” corner. Agree with it or not, it appeared to be a practical necessity

There was, however, a perceived problem with the second scheme. There was a view held by some that it encouraged people to “hold back” on the day job, and try to exploit the scheme, gaining rewards for things that they should have been doing anyway as a salaried employee. It appeared that a happy middle ground was not so easy to identify. We were still firmly in the “make it worth their while” corner however as, when offered the choice between an over-exploited scheme or an obsolete one, the former certainly appeared to be the lesser of the two evils as it did move the organisation forward in degrees

There is another way to look at it. Check out this article that outlines W E Deming’s view on motivation. The argument here is that there is an intrinsic motivation within all of us (to take pride in a good job) and the provision of external motivation through reward schemes is only ever a work-around fix for a broader systemic failure. That is, somehow the organisation has successfully found a way to demotivate people, and the reward scheme is no more than a patch thrown over the more fundamental problem

Wow. Where do we go with that one? Say, for example, you’re a new senior manager in a business, reviewing the performance of a reward scheme (such as the one at Fort Leavenworth) and you start debating the whys and wherefores of it all. If it subsequently becomes apparent that people will not engage without incentives, what do you do? Clearly the damage has been done over the years. What are the options? Let’s go through the main ones:

Option 1
Decide that Deming was right and that reward schemes are wrong. Elect to address the underlying systemic demotivators

Option 2
Decide Deming was right, but decide the damage has already been done and that an incentivised suggestion scheme is the only practical way to re-engage people in the short term

Option 3
Decide Deming was wrong and implement an incentivised scheme

Option 4
Do nothing

It does not take a genius to identify that there are pros and cons associated with each approach, and also no guarantee that any of them is actually “right”. There are dozens of respected motivational theories none of which have been sufficiently proven to become “laws” and not all of them even consistent with one another. Option 1 offers us only a possibility longer term gain, with few obvious quick wins. Option 2 offers us some potential short term gains, but leaves us with the problem of an “exit strategy” once we have started to address the systemic weakness. Option 3 offers us some short term gains but runs the risk of making things worse in the long run, while Option 4 offers us the cozy satisfaction of not having to do anything at all just now, but leaves us with an unsatisfactory status quo

Even after considering all of this, we are STILL in the “make it worth their while” camp. Not necessarily via incentivised suggestion schemes, mind you, just that we firmly believe in the “What’s in it for me?” influence on most life choices. People are, after all, just animals. Anyone who keeps a pet will have observed the basic simplicity of rules that they appear to abide by. Given a choice an animal will generally take the option that appears to give them the most favourable outcome, and we suggest people are no different. You give a person two choices and they will always take the route they judge will result in the most favourable outcome to themselves (they may not always get it right of course)

So ultimately if people are to be “conditioned” to take pride in their work and do a great job without the need for added incentives, this must be made an attractive long term proposition. And if people are our greatest asset, all this should be worth the effort

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4 Responses to Incentive schemes, good or bad for quality?

  1. Pingback: Deming on involvement of people | Capable People Blog

  2. Recently seen your motivational blog with Yahoo search page. I believe this is a really succinct article. I will be sure to favourite it and be back to study additional valuable information. Many thanks for the post. I will definitely be back.

  3. rob says:

    Bad. Truly, truly understand the meaning of kaizen, then the answer will be clear

  4. Travis says:

    I like this articule, as I think it strikes at the heart of an organisation. To look at the culture of an organisation, you also need to look at the culture of the people who work in it. Take for example, Japanese companies, the employees take pride in improving processes and work ethics, it is part of their job and way of life. Organisations should install a culture of looking for improvements, possibly at the moment, it should involve some reward, and that over time, it should be decreased and eventually withdrawn.

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