Mistake 17: Leaving the old evaluation and compensation scheme in place

Want to get someone’s attention?  Change the way they are evaluated and compensated.  We humans are (relatively) rational actors.  We do the things that bring pleasure, reward, accolade, and attempt to avoid actions that result in pain, disappointment and ridicule.  That’s true in high school, and it’s true in the professional world as well.  People do what their job descriptions, evaluation programs and compensation schemes reinforce, and studiously avoid doing anything else.

So what happens when a passionate innovator meets encounters a rigid, inflexible evaluation and compensation scheme?  Perfect stasis.  While the innovator may greatly enjoy creating new ideas, if his or her evaluation, compensation and potential advancement depend on doing the “day job”, then it’s the day job that gets done.  Innovation, while appealing, motivating and perhaps even more beneficial to the company, gets left by the wayside.

It’s really not that hard

I’m constantly confounded by the mixed messages that companies send to their employees.  “Innovation is important”.  “We need your ideas”.  “We’ll only compensate you for your regular work”.  If innovation is so important, so critical for corporate success, why won’t executives modify or at least temporarily pause evaluation and compensation schemes so good innovators are fully engaged in creating new value?  Do they simply not understand how much grief an individual receives if the miss a deliverable in their “day job”, and how little trouble is created if the entire innovation project goes off the rails?  I’ve had innovation team members working on “mission critical” innovation projects tell me they need to take two or three weeks off from the innovation project to complete a task from their “day job”.  It’s not even a question of trade-offs.  People know where their bread is buttered.

A recipe for success, or failure

If you want continuous, high quality innovation, if you want your best and brightest focused on innovation, you need to think carefully about how people are measured, evaluated and compensated.  The absolute worst position to be in is as a dedicated innovator who has a mission critical task due from the “day job”.  Which do you choose?  I can’t fathom why so many companies declaim the importance of innovation, but leave the reward systems and compensation systems for their “business as usual” in place.  Without changes to the evaluation, compensation and advancement programs and systems, innovation can never be more than an occasional, sporadic, haphazard activity run with borrowed resources that are easily distracted.  Does that sound like a recipe for success to you?

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