Posted by Boris Pluskowski on October 31, 2002 at 11:28:33:

Hi All,

This is an ecerpt from an article in the Corporate Innovation Newsletter that we run, in response to a query posted by Shin under the Dynamic Knowledge posting - although focussed on Idea Management, i believe this has some relevance to KM too - especially when you consider how to reward employees for sharing their knowledge. Hope this is of use:

Reward programs have been synonymous with suggestion systems since the last 1800s. The first program, at William Denny & Brothers Shipyard in Scotland, offered small financial rewards for implementable business ideas, a useful supplement to the income of ship workers.

In recent years, important research into rewards and behavioral psychology by Archie Kohn has revealed the darker side of incentive programs. His book, "Punished by Rewards", describes vividly the problems of prescribing tangible incentives to motivate good behavior, or to dissuade people from negative behavior.

In the world of Idea Management, common pitfalls include:

Winner Takes All - one single prize is a great incentive, but everyone from second place is a loser

Money Talks - Financial rewards are quite common but you must take care to pay attention to the level of rewards. One client offered US$1000 as the top prize... for their African subsidiary. That was the equivalent of $10,000 in local currency. It is hard to motivate the same group for the second time round - a $50 Amex voucher just does not seem as attractive.

YAP (Yet Another Plaque) - They can be very effective for some people but an insult to others. Use with caution - people can tell when something is run through a laser printer.

Cost Accounting Rules - Many manufacturing firms use percentage of cost savings as the primary reward. This has a number of positive effects, many of which can be overwhelmed by the negatives. You need a lot of accountants to really measure the benefits, you need an appeal process to manage disgruntled employees, and sometimes you end up with the difficult task of explaining why a line worker has just tripled his or her salary from a seemingly obvious idea.

A good reward program can be a great motivator, but a bad reward program can be devastating.

• Imaginatik - Idea & Innovation Management

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Follow Ups:

• Re: Dangers of Rewarding Employees Akhil Shahani 13:25:01 10/31/02 (7)
  • Re: Dangers of Rewarding Employees Boris Pluskowski 14:51:22 10/31/02 (6)
    • Re: Dangers of Rewarding Employees Akhil Shahani 23:48:53 10/31/02 (5)
      • Re: Dangers of Rewarding Employees Boris Pluskowski 10:29:20 11/01/02 (4)
        • Re: Dangers of Rewarding Employees Reilly Atkinson 18:08:16 11/01/02 (3)
          • Re: Dangers of Rewarding Employees Jack Vinson 10:32:24 11/05/02 (0)
          • Re: Dangers of Rewarding Employees Boris Pluskowski 13:03:44 11/04/02 (1)
            • reward and promotion Matthew Nti 14:28:00 03/07/03 (0)

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