Incentive marketing is a $46 billion plus industry. Incentive management is based on the belief that people will be motivated if—and often only if—they are recognized, rewarded, and incentivized toward goals.
In his bestselling book, Drive, Daniel Pink popularized the extensive research that invalidates such claims. But the belief in incentives has been hard to erode, mainly because they actually do work for one very specific kind of task: simple and short-term. Incentives do not work for complex projects and strategies that require longer term thinking, the kind that increasingly challenge business leadership.
Pink’s synthesizing work not only demonstrates that claims that incentives improve performance are not true; it also shows that incentives and rewards often do the opposite. They reduce motivation.
Some reports suggestthat it is now the incentive industry that keeps the old notions alive, just for the revenue into their businesses. What is less well known is that there are effective organizational approaches, validated for decades, by which people motivate themselves inside the business.
Starting in the late 80’s, Kingsford Charcoal utilized a method that eschewed incentives, bonuses, rewards, and recognition across functions and levels of the organization. The motivation they pursued was intrinsic, one which would have real staying power and avoid politicizing or gaming the system. “Short-term” and “competitive” are two of the many shortfalls research has identified as ways incentives reduce motivation. With the intrinsic system, no one can game it, because there is no contest.
Kingsford based its system of intrinsic motivation on three guidelines:
First, individuals or cross functional teams develop ideas to improve effectiveness for sets of customers or consumers in meaningful, measurable ways, such as “doneness to order.” They then gain alignment with all persons and functions affected by the changes. Improvements are aligned with business strategy and must demonstrate returns on earnings, margins, and cash flow. Improvement plans also include specific means for improving Earth’s regeneration and community and societal benefits must accrue as part of the work.
Second, the teams or individuals specify the new capabilities that will be developed for the business and its system of stakeholders (e.g. suppliers). Then they rally support in terms of time, investment, and capability to pull off their “promises” to develop the capability and produce the improvements. (Even early on at Kingsford these “promises beyond ableness” were extremely demanding commitments.) They hold progress meetings with those committed to the success of the improvement and to the new capabilities of members promising to deliver the new value.