A Little Trick with NICK

By Thomas J. McCoy, President, Employee Engagement Institute

More than one company has come to the conclusion that incentive plans don’t work. Keep reading to find out why they are wrong.

A Story

Leadership wanted to improve the level of focus, understanding, commitment, and accountability among the employees. The strategy included a ScoreCard-based incentive plan.

It took sixteen weeks to develop the plan. The team worked hard to produce a design that transformed data into information and, in turn, produced a clear line-of-sight from contribution to outcome. SIPOC (1) diagrams were created. Work flow and process maps were developed. The voices of the internal and external customers were captured. And deliverables were identified.

Each department had a ScoreCard linked to incentive pay. Department managers were educated in the plan mechanics. They were provided with detailed descriptive materials to review and share with their employees.

The employees were gathered and leadership announced the plan.

Supervisors conducted department meetings to help employees develop understanding and acceptance. Employees expressed mild interest and went back to work.

The plan champion made efforts to communicate deeper understanding of the metrics and the actions that could improve results. Some managers reviewed performance results with their employees as they became available.

The value of the deep knowledge and the linkage of information never materialized.

A few months later, employees began to complain about the plan design. “Others were earning more for doing less.” “We are being measured on things over which we have no control.” “Others are damaging our prospects.” “The plan doesn’t work.” “It’s not fair.”

Those who were involved in the selection of the objectives and the development of the metrics knew these allegations were baseless, if only the employees understood the plan.

It was the beginning of the end. Two months later the plan was shut down.

Sound familiar? It happens more often than you think. Leadership takes a run at it, stumbles, gives up and says, “Incentive plans don’t work.” Incentive plans are HARD…but they do work.

For the past 32 years, I’ve worked in the Employee Engagement (EE) discipline.

One of my foundation tools is the department-level ScoreCard, often linked to incentive pay. As the above story indicates, while there are many difficulties developing a ScoreCard, the subtle, underlying problem, the problem that can sink the ship, is lack of understanding, and thus acceptance, on the part of the participants.

Having developed over 200 ScoreCard plans, I’ve found that acceptance is based on how the participants relate to the objectives. If they see them as being relevant, meaningful, controllable, and personal they will make an effort to understand them.

With that awareness, I’ve always included employee alignment workshops as part of the design process. It’s a good solution. But success was always contingent on the process and on the quality of management.

Alignment workshops are not the perfect answer. They tend to cover everything with the same brush. They consist of group meetings that treat all participants as if they had the same issues and concerns. The process requires the manager to assume the role of overseer and subject matter expert; trying to anticipate all possibilities and describe, explain, show, and convince…before sending everyone back to work.

How can we improve the process and the outcome? A little trick with NICK may be the next evolutionary step in developing alignment.

NICK [Acronym]: Negotiating In Collaborative Knowledge
The practice of obtaining information or input into a topic by enlisting the wisdom of a number of people.

The Trick

I recently came across a neat piece of e-software called “Teams Get It” which may enhance acceptance of incentive plan objectives. It’s aptly named because its purpose is to help individuals and teams develop alignment and commitment.

I like it because it’s simple to use. It’s an app that captures individual opinions about a topic by asking two interrelated questions. The trick is to ask the right questions.

I use it in alignment workshops to parse out the underlying opinions about the ScoreCard design. Participants receive a link to a page where they can provide their opinions about each performance objective. The questions I ask are: 1) How much do you agree and, 2) How well do you understand.

Using a Likert scale rating from low to high, each participant can record their degree of support for each objective for all to see. Based on the questions, a low score indicates a lack of acceptance of an objective either because it is actually not appropriate, or because the participant does not understand the relevance of it.

Either situation can be resolved; either by eliminating the inappropriate objective, or by providing specific information that develops a deeper understanding of the objective and its relevance to the individual. It has been my experience that ScoreCard incentive plans will promote active participation if these two opinions are thoroughly addressed on an individual level.

In this process, rather than the role of overseer, the manager assumes the role of facilitator. The app identifies individual issues, concerns, and questions about the objectives. The facilitator encourages negotiation of these in a group environment of collaborative knowledge (NICK.)

The app provides everyone with a visual display of all responses. This enables the group to share understanding, either remotely or together, and help each other reach consensus. Naturally, the prerequisite for this is an environment of openness and trust where people feel safe in expressing dissident opinions.

“Teams Get It” (3) is a nice piece of software that helps develop individual and group agreement, alignment, and commitment…a little trick with NICK.

Thomas J. McCoy

Thomas McCoy is President of the Employee Engagement Institute, a management consulting firm based in Kansas City, MO.

He is the author of two books on compensation & employee engagement published by the American Management Association. (2)

He has over 30 years experience designing Applied Employee Engagement Systems that help leaders develop a high-involvement, high-performance culture. Fundamental components of these systems are performance ScoreCards, incentive pay plans, competitive market-based pay structures, and deferred incentive pay plans for key employees.

He has been featured in the Wall Street Journal, quoted in Newsweek, and taught a continuing education course at George Washington University titled Creating a High Performance Culture.

He is a graduate of the University of Minnesota and a member of MENSA. He holds a LEAN Six Sigma certificate from Villanova University and a Leadership Coaching certificate from the Johnston Institute.

He is a volunteer board member for Support KC, a non-profit organization that helps other non-profits improve their business practices.

Thomas J. McCoy

References

(1) SIPOC; In process improvement, a SIPOC is a tool that summarizes the inputs and outputs of one or more processes in table form. It is used to define a business process from beginning to end before work begins. The acronym SIPOC stands for suppliers, inputs, process, outputs, and customers which form the columns of the table.

(2)

  • “Compensation and Motivation” selected as a textbook at Florida State University for their Advanced Management Practices studies.
  • ‘Creating an “Open-Book” Organization’ nominated for the Society of Human Resource Management (SHRM) “Book Of The Year” award and translated into German.

(3) “Teams Get It” software: Academy of Culture Ambassadors. https://academycultureambassadors.com/#teams-get-it

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