First Prize is an Cadillac El Dorado. Second prize is a set of steak knives. Third prize is you’re fired.
In my experience, the organizations that try to promote individual rewards and incentives destroy team cohesiveness.
For example, one company I know of was very proud of their individual reward mechanism. The problem was that:
- “hard” work / long hours got rewarded.
- only one person / dept. got rewarded.
- there is no incentive to spot a problem ( and proposed a solution ) before it was a crisis.
- a winner-take-all mindset people were indifferent to trying to achieve a reward because the reward was like winning the lottery,
- there was little connection to effort put into reward achieved.
- Someone had to work harder than everyone else in a visible way
- work for a well-respected manager who could advocate for his person being rewarded.
- the reward was individual-based so heroics overcoming crisis were rewarded, not crisis prevention.
While firemen are important to put out the fires that occur, good organizations rely on the fire inspectors that look for problems before the fire starts. Once a crisis ( fire ) occurs damage is already being done.
In Founders At Work, Max Levinson talks about how Paypal survived because even before fraud was at crisis levels, Max started building systems to prevent and stop fraud. Paypal’s competitors were reporting fraud rates in the 20% range. Because of Max’s work, Paypal never had fraud levels that high. Max was not being “heroic” but his “fire inspector” work prevented a fire that consumed Paypal’s competitors.
Do you reward your fire inspectors?