Organisational Entropy: Why your company’s incentive systems need rethinking.

HOW IS YOUR INCENTIVE STRUCTURE AFFECTING YOUR ORGANISATION?

Economists often describe how people always try to act in their own self interest. Corporate incentive programs are often myopically based on compliance, cost savings and short-term revenue that devalue the customer experience — which puts them at odds with an employee’s true self interest.

Why have big organisations so often evolved a system where executives are rationally motivated to pursue short term quasi-success? We think that tying employee incentives to true customer advocacy will provide sustainable incentives for employee behaviour organically.

NPS NEEDS TO BE YOUR PRIMARY DRIVER OF INCENTIVES, FOR ALL EMPLOYEES

The solution to this paradox is to introduce more customer-centric measures of success that counteract traditional metrics. Tying an employee’s performance to the effect on the company’s Net Promoter Score (NPS) is the best way to achieve this. Any rise in NPS results in longer customer relationships, greater rate of customer acquisitions and higher net retentions, all of which can be assigned a dollar value when tied to things like customer’s average spend.

Using intelligent customer experience software such as inQuba, your organisation can effectively track the relationship between organisational actions and their effect on customer sentiment in real time.

MAKE A CHANGE BEFORE IT’S TOO LATE

There is no doubt that the traditional metrics used to underpin incentive programs are important on some level, but the way they are championed as the primary determinants of an employee’s contribution to organisational success is just wrong. Only by monitoring the effect of employee actions on NPS and using this data to administer incentives will your company undergo a genuine shift towards improved customer-centricity and long term success.

Without making this change, your business is on a direct path to the costly alternative; unhappy customers that are expensive to maintain and acquire, eventually fatally so.