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How metrics can complement your incentive system.
Positively influencing the behavior of employees to improve focus and effectiveness towards company goals is a challenging task. Commanding employees what to do and how to do it is one approach. However, not a very sustainable one. But how can employee’s behavior be influenced to focus on the right tasks at the right time, while avoiding direct orders?
Incentives
People are driven by tangible (reward has monetary value) or intangible incentives (non-monetary value) throughout their workday. Both incentives are tied to either directly or indirectly measurable metrics.
Graphic 1: Incentive types
The effectiveness of incentives depends on three factors.
Cognitive Frames
Incorporating the current believe system when formulating incentives increases their acceptance (e.g. things have always been done in a certain way).
Context
Considering incentive-specific circumstances improves focus of employee behavior (e.g. Employee level, role, task).
Metrics
A direct or indirect quantification to increase measurability of outcome (e.g. Growth: revenue, employees).
Metrics
Metrics should measure output relevant to a particular business goal. If the intended business goal cannot be directly measured, a proxy for the output can be formulated. Good metrics used as incentives have the following characteristics:
Objectively measurable over time
Causality to expected behavior
Directly controllable by incentivized employee
Furthermore, to incentivize employees to complete the right task at the right time, timing of the metric's measurability is important. Good metrics are measurable today. This makes actions transparent for immediate reward.
Transparently tracking metrics to incentivize the workforce will shift focus towards actions that improve these metrics. Hence, it is important to understand the inter-dependencies between metrics to avoid negative effects on other business activities.
Essentially, identifying a meaningful combination of tangible and intangible incentives to focus employee behavior is key. These incentives should be made transparently measurable using metrics that fulfill the three core characteristics.
Graphic 2: Properties of metrics
At Spark Mind we can help you analyze your current incentive system and in collaboration redesign your incentives along existing business goals with the right metrics.
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