Incentives do not automatically raise performance. At a BPO process described by corporate trainer Amit Joshi, monthly incentives produced no significant improvement; employees learned the formula and did only the minimum needed to qualify. Motivation lifts performance when the right motivating factors are identified and schemes are tested, monitored monthly and run fairly and transparently.
Last updated · Bodhih Insights team · reviewed by Siddharthan VGJ, Founder
Although motivation can have some benefits and can drive performance, one has to exercise due caution in executing the motivation activity and also while estimating its impact on performance. One big flaw would be to blindly assume proportionate increase in performance by rolling out incentives. I would like to cite an instance from my own work experience to prove this point. I used to manage a process for a US client in a BPO firm. Initially, all the employees received a fixed salary regardless of their performance. As the company grew, the management decided to roll out monthly incentives, to reward good performance.
From our subsequent observations, we found that there was no significant improvement in overall performance post rolling out the incentives. Secondly, the employees became more calculative in their approach and once they understood the entire incentive calculation, they would simply ensure that they met the minimum performance criteria required to receive their incentive target and put no additional effort beyond that. As a result the company just bore some additional expenses in salary payouts without seeing any significant boost in performance.
From the above example, it is amply clear that the management and all the other parties involved must be extremely cautious and meticulous while designing and executing any incentive plan in the organisation. All possible combinations and test runs should be performed prior to finalising the plan and it must be closely monitored month after month to ensure accuracy and effectiveness.
In conclusion, I would like to say that employee motivation can enhance performance, provided, the RIGHT motivating factors are identified for all employees and if the activities are executed in a Fair, Transparent and Accurate manner.
Amit Joshi
Corporate Trainer
Behavioral skills and Soft skills
Quick answers
Why can incentive schemes fail to improve performance?
Employees may become calculative once they understand how the incentive is worked out, meeting only the minimum criteria and adding no extra effort. The company then pays more without a matching gain. Testing the plan before launch, monitoring it month by month and keeping it fair and transparent reduces this risk.
