It happened again this week. I often reach a point in the incentive plan design process with an organization when I realize that "they" (typically representatives of the organization's management team) are trying hard to cram every possible performance metric into the plan. No stone is being left unturn in an effort to address each and every desired outcome or behavior.
This is when their unstated (perhaps even unconscious) agenda starts to emerge: To design the plan so well that it will effectively manage their people for them. That is my signal to put the brakes on the process and take time out to remind them of what an incentive plan can and cannot, will and will not do for them.
Incentive plans, at their most successful, are all about focus. Well-designed and well-implemented plans can focus employees on the few key things you really need them to pay attention to and where you want them to make a positive impact. That's their special strength. And that is why the most effective incentive plans -- the ones that really produce positive change in an organization -- are those with only a few (no more than 3 or 4) measures. Too many measures leads to motivational dilution. To focus on everything, really, is to focus on nothing at all.
So organizations that expect their incentive plans to do their performance management for them are missing the point and, ultimately, bound to be disappointed. Incentive plans can play a powerful role in an overall strategy to improve performance -- but as a support for, rather than in lieu of, strong management.
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