Recognizing And Rewarding Innovation
You need to consider your reward programs carefully before you launch idea campaigns or other innovation initiatives. You need to consider what kind of behaviour and which kind of results that should be rewarded and you need to consider how to reward this.
I believe most companies really long for an organization full of self-motivated employees that see innovation as a natural part of the business and their work. For this to happen, I believe recognition is a much better tool than financial rewards.
Such recognition should be made as public as possible and it should involve a high-ranking executive if relevant and possible. Recognition can also be accompanied by small gifts such as a dinner for two (it pays to remember the spouse of a hard working employee). Enough to matter but not so much that it over-shadows the recognition given.
Like this, the employees get a pat on the shoulder and they can better explain to colleagues, family and friends what they do and that their work is valued by the company. Such recognition should of course also enhance the prospects of a promotion. For the company, this is a great chance to promote innovation within the company. Nevertheless, I am amazed how often companies do not execute on such opportunities.
Why is recognition so important? I remember a conversation I had with Google employees a few years back. I asked them what actually drives people at Google and they replied: First of all, there are very few places where you get the chance to really make a difference and see your work being used by millions of people. The other thing is that Google has some of the brightest employees in the world. It feels great to impress such colleagues. That drives us.
If employees at what is considered one of the most innovative companies in the world are driven by impressing each other, I think this goes in other innovative organizations as well. And with such a driver, recognition can help create innovative behaviours and results.
On rewarding and recognizing innovation, there are a couple of things that we should be aware of:
Participation versus contribution. Getting people engaged in innovation initiatives – especially idea generation campaigns – can be a challenge in some companies. Then you might have to focus on recognizing and rewarding just for participation. But in the long run, recognition and rewards should be given to those who really contribute towards the desired outcomes.
Internal versus external recognition. As companies go outside the corporate boundaries to innovate, they have to deal with issues on how to reward and recognize external contributors. This is something that will get a lot of attention in the coming years.
If we look beyond private people contributing to initiatives such as Dell IdeaStorm and MyStarbucksIdea, then we have professional contributors in the form of employees at partner-companies and individuals who contribute either directly or through intermediaries such as InnoCentive.
Recognition definitely still plays a role here, but the challenge is that external contributors do not stand to gain much from corporate recognition. It becomes more of a question on how to make the contributors look good in the larger eco-system. This is difficult and thus financial rewards might be more relevant here.
Big rewards versus small rewards. Innovation is team-work and if companies begin to offer big financial rewards on an individual basis they could set people up against each other. Be careful about turning colleagues into rivals.
As I said first, I believe recognition is a better tool than financial rewards. It would be great to hear your take on how to recognize and reward innovation.
Excellent post! Hopefully I can add to the discussion by zooming out to the 50,000 foot level. Make sure that your innovation recognition program aligns with the other recognition programs your company offers. There are many star performers who are not innovators, yet just as valuable. You don't want any friction arising because the innovation recognition program was "better" than the others. Therefore, I recommend taking a systems approach and viewing all recognition components as part of the organizational system.
I'll be reading…
Glenn
Stefan,
all this is nice and dandy and right – but applies to all R+R schemes. For rewarding innovation, I think we need a special treat relevant for the innovative employee. One proven tool is to grant the successful innovator time, resources, and (some) money as R+R so he can start a project he always had in mind but could not get support for. Even if it does not fit the currently agreed business strategy. Nothing motivates an innovator more than seeing HIS innovation come to life. You never know what he'll come up with and what business opportunity this will create – think of Post-It! BTW I think Google is practising this approach already.
Stefan
When you help companies, how you are payed: with money or with recognition ?.
I expose one case: You are a "process engineer" and you develop a new process that cut costs in 30 MM euros every year, if you receive recognition and later the company hired you because of "economic crisis", how do you'd felt?: Happy with your recognition in hand or you'd prefered money in your bank account.
Joachim, I agree – that would be a great reward/recognition
Gian, I get paid with money – just as employees get their salary. Hopefully, my work is also recognized by my clients and within their network – just as the work of innovation leaders and intrapreneurs should be recognized.
Re. your case, I think almost everyone would like to make some real money in such a situation. However, I would not expect this as I am just doing what is expected from me as an employee when I developed that solution. Hopefully, my good work has been recognized and if I am lucky I could get a bonus – on top of my salary.
The company just need to be careful about this. What if all employees begin to expect big bonuses for doing great work? What if they started not to care about their work and decided only to be innovative when they get financial incentives to do so? This is not not good for building a strong, long-term culture of innovation.
Unfortunately, many companies have to let even great employees go. It is tough right now. But hopefully, my great work and work ethic is recognized in such a situation making me one of the last people they would fire.
Stefan
Stefan,
I would like to start by saying that I really enjoy your blogs because you often bring some fresh thoughts into existing challenges. So I was rather intrigued when you touched on this extremely challenging topic of R+R. I have to say I find your ideas a bit traditional.
I think it is little unfair to use today’s Google as an example. It cherry picks its employees, pays them extremely well and has a huge brand value. These factors are vital components of the recognition package you mentioned. Most companies cannot afford these luxuries.
I have never had a chance to work for Google but I have had for a few big organisations. The biggest factor that stops people from making contributions is that they feel that they will not get a fair share of their contributions. A dinner for two or a few thousand dollars just does not cut any more. In an enterprising world most innovators work for themselves where they can get more credit, cash and control for their critical thinking.
Also the “us and them” attitude amongst management creates an atmosphere of unwillingness to contribute above the call of duty. You mention that “what if all employees expect large bonuses”. Employees, on the other hand, feel that by making a innovation they will merely be adding to the bonuses of the company executives.
Nonetheless it is tricky subject but in my experience companies which are able to create a feeling of fairness in sharing of pain and gain have better contribution/innovations from their employees.
Hope to hear more from you.
Nilanjana
Stefan,
I would like to start by saying that I really enjoy your blogs because you often bring some fresh thoughts into existing challenges. So I was rather intrigued when you touched on this extremely challenging topic of R+R. I have to say I find your ideas a bit traditional.
I think it is little unfair to use today’s Google as an example. It cherry picks its employees, pays them extremely well and has a huge brand value. These factors are vital components of the recognition package you mentioned. Most companies cannot afford these luxuries.
I have never had a chance to work for Google but I have had for a few big organisations. The biggest factor that stops people from making contributions is that they feel that they will not get a fair share of their contributions. A dinner for two or a few thousand dollars just does not cut any more. In an enterprising world most innovators work for themselves where they can get more credit, cash and control for their critical thinking.
Also the “us and them” attitude amongst management creates an atmosphere of unwillingness to contribute above the call of duty. You mention that “what if all employees expect large bonuses”. Employees, on the other hand, feel that by making an innovative contribution they will merely be adding to the bonuses of the company executives.
Nonetheless it is tricky subject but in my experience companies which are able to create a feeling of fairness in sharing of pain and gain have better contribution/innovations from their employees.
Nilanjana
Stefan,
Thank you for your input, I agree with your assessments. I think some here have argued the details around and R&R system in which none is right or wrong.
I would add that a companies R&R system should be continually reviewed (for effectiveness), updated (for relevance) and changed (to keep it interesting). If you don't change the system, people lose interest and figue out how to manipulate.
Take care,
Steve
Nilanjana, thanks for your thoughts on this…
You mentioned "The biggest factor that stops people from making contributions is that they feel that they will not get a fair share of their contributions."
I really disagree on this. It is my experience that the people who can really make things happen focus on job challenges and oppportunities before financial rewards. One reason for this is that they are great people who can fairly easy get other jobs (well, it used to be so).
So a good financial package is usually what they expect to get when they signed on for the job and thus they do not see the lack of financial gains in terms of bonuses as something that will stop them from contributing.
If employees have such a mindset they should definitely not work with innovation. And if possible, they should be kicked out.
By the way: what is wrong with traditional ways of doing things if they work?
Stefan
The topic you touched is really crucial. Especially at this important juncture when economy is in recession / perhaps start recoverying from recession.
Only those Companies would be able to weather the storm / recession and comes out unharmed, which has a culture of nurturing innovation, empowering their employees and recognizing thier efforts either through monetary reward or through verbal recognition of their valued contribution.
Innovation is life blood for Companies and empowering employees would enable to keep it alive. Not all employees would be motivated through high perks. For some intrinsic satisfaction comes from work itself / through verbal recognition they are getting from their employer.
I tend to agree with Nilanjana that there are some folks out there who thought that their contribution would earn them nothing but only add bonuses to thier superior / executives. Nilanjana has touched upon another topic i.e. reward culture that prevail in the entity itself. The Recognition and Reward are culutral issue that needs fine tuning at outset otherwise it would not earn loyalty from employees who tend to switch jobs in pursuit of high perk. (Remember fairness theory of compenstation)