Steven H. Seggie
Jul 10, 2017 · 2 min read

Rewarding / Incentivising employees:

This is the third in a series of writings about corporate innovation. In the first piece I wrote about the importance of getting employees involved in innovation (https://medium.com/@Seggitorial/encouraging-employees-to-innovate-db7c48e6fd1), while in the second piece I wrote about specific ways to encourage innovation in your company (https://medium.com/@Seggitorial/specific-ways-to-get-all-employees-involved-in-innovation-3f45910ba5f7) In this third piece I want to focus on how to incentivise and reward employees.

To ensure that employees get involved in internal innovation efforts, it is key that the incentives for doing so are aligned with getting more people to participate. There are many horror stories of firms not rewarding ideas appropriately and I have even seen employees being punished for bringing forth new ideas. In one company I worked with, the winners of the innovation tournament (in the year before I worked with them) were told to come in to work on their day-off to realise the project. As you can imagine, the next tournament had few participants.

In my experience there are 3 key issues:

  1. The reward has to be timely. It is no use rewarding people 1 year after they have had the idea by which time they have completely forgotten about it. They should be rewarded within a couple of months.
  2. There has to be timely feedback given. This feedback could be that the idea is not very good or something more positive but it needs to be given. Also if the idea is subsequently pursued by the company then the employee who came up with the idea should be told and maybe even asked if they want to be involved. If the idea is not being pursued, then the employee should be informed too and it doesn’t hurt to give a short explanation as to why.
  3. The reward to the employee for the idea has to be commensurate to the idea. Employees can be given money or holidays, or whatever, however, it is key that the reward is proportional to the amount saved or gained by the innovation. Firms often fall on the conservative side and give rewards that are too little but if the firm wants its employees to keep coming up with ideas then it is key that the reward is in proportion.

I am interested to hear other’s ideas on how to reward / incentivise employees.

Steven H. Seggie

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Marketing Professor; Corporate Innovation; Venture Capital; Start-Ups; Cross-cultural business