Why Reward Systems?
The only way employees will fulfill your
to share in the dream. Reward systems are the mechanisms that make this happen.
"However, reward systems are much more than just bonus plans and stock options.
While they often include both of these incentives, they can also include awards
and other recognition, promotions, reassignment, non-monetary bonuses (e.g.,
vacations), or a simple thank-you."5
"You get more of the
behavior you reward. You don't get what you hope for, ask for, wish for or beg
for. You get what you reward."
~ Michael le Boeuf
You Get What You
The greatest management principle is
that the things that get rewarded get done. "You get more of the behavior you
reward. You don't get what you hope for, wish for or beg for. You get what you
When your employees do hit the target
and meet a
you set for them, reward them immediately. Never stall. By doing this, you help
employees directly connect the reward with behavior and higher performance
they've attained.4 "Fail to reward the right behavior and you will
most likely get the wrong results."3
Pay with Performance
Create heroes in each role and link pay with
Create performance-related broad bands for pay within each role. Overlap
bands for pay vertically to give an opportunity to a high-performing
employee to earn more than his or her supervisor. This will help
high-performing employees who
love what they do not to seek to moving to the next rung on the ladder.
that provide a high upside for a
success and at the same time a downside for
help to encourage managers to inspire
intrapreneurs and stimulate an
High-growth companies use equity,
phantom stock, and royalties as a way of sharing the wealth generated by new
technologies. Instead of actually giving people stock in the company, you give
them a promise to pay them a cash bonus at some future point equal to a certain
percentage of the company's equity.
Rewarding Idea Generation
Recognition and rewards are fundamental elements of any successful
Idea Management program. They
perform a number of important roles. Most programs now provide a mix of
corporate recognition, career advancement and trinket-style gifts...
In order to create a
independent owners, Dell decided to reward employees around a matrix
of Return on Invested Capital (ROIC),
and growth; higher performance directly correlated to higher ROIC, which
came back in the form of higher compensation...