I had a conversation recently with Ray Schwemmer, CEO of CollabraSpace. Ray and his COO Shawn Davis have been working on a number of new corporate initiatives and as is often the case, the conversation drifted toward incentive plans and did they really motivate the kind of behavior leadership was looking for.

We talked about the new Malcolm Gladwell book, Outliers: The Story of Success.  One of the fascinating stories shared by Gladwell was the work habits of the typical Asian rice farmer.  Having grown up on a dairy farm in Pennsylvania, I was keenly interested in this idea of work ethic and the farmer.  In a nutshell, Gladwell suggests that work can be rewarding to the individual and beneficial to the organization (or society) if it is:

•    Meaningful – a clear connection between effort and reward,
•    Complex – the problem set was sufficiently challenging and
•    Autonomous – decisions are made on your own and coordinated.

So I suggest that any mid-market leader attempting to build incentive plans while ignoring these simple rules does so at his own peril.

Meaningful

Make sure your team understands that the extrordinary effort you are asking for will be fairly and perhaps handsomely rewarded.  Don’t scrimp on this.  Make the reward clear, straight forward and as close as possible to real-time.

Complex

Mundane work will numb the brain.  Innovation suffers in an enviroment where the rules can be overbearing.  Old market rules that once applied will be followed until either the market dries up or you are run out by the competition.  Always encourage your team to be creative in their approach to your business challenges.

Autonomous

Bob Blonchek and I wrote a book called Act Like an Owner with a central theme of creating an ownership culture.  Stephen Covey’s The Seven Habits Of Highly Effective People calls out six levels of initiative with the final being the ability to act on your own.  Teach your leaders the rules of your business and allow them to surprise you.

By the way, if you haven’t had a chance to read Outliers, it should probably be your next book purchase.  Right after you’ve updated your incentive plans !