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Many companies are seeking to align their employee incentive programs with measurements focused in generating value for both customer and shareholder. The issue here is that there are several decisive factors that must be taken into consideration before designing these incentives within the organization.

To design a proper system you must consider what motivates (or not) the people involved in the incentive program to be implemented, so they will achieve the desired objectives for the organization. It is sometimes thought that if they fail to achieve results this is the responsibility of people, when frequently what must be analyzed is the design of the system or process in use.

The benefits of aligning incentives to customer/shareholder feedback might be significant. But before this is enforced, five conditions must be met to avoid risks or pitfalls:

1. Having truly reliable feedback and metrics

If your scores vary from one period or unit to another, it is because you do not have a reliable measurement and feedback system.

2. A clear link to financial and strategic outcomes

The customer measurement must correlate with financial and strategic goals. Without such a link, the incentive system will not last long.

3. Processes and tools for understanding root causes

Tools to analyze the real problems and provide solutions should be developed.

4. Organized learning

You will also need to supplement tools with the root-cause disciplines, processes and leadership support for learning and improvement of the organization.

5. Repeated communication

If you don't remind people regularly that they are being rewarded for what they do, they're likely to misinterpret the system focusing more on the mechanics of payment than on the spirit of what you are trying to accomplish as an organization.

To achieve credibility and trust within the organization, these 5 conditions prior to establishing an incentive system must be followed. Meeting these preconditions will not guarantee success. You will still need careful experimentation to exactly discover what works for your company. Unless you have met them, though, don't expect real change and substantial results with your incentive system.

Markey, Rob (2011, September), Pay Before You Link to Customer Feedback: Five Essentials.
Harvard Business Review [online]. Retrieved on March 26, 2012, of
http://blogs.hbr.org/cs/2011/09/how_to_link_pay_to_customer_fe.html.

 
 
 
 
 
 
 
 
 
 
 
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