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This is a great example of how to leverage the power of the people closest to the problem. Not only does this type of process provide recognition of their importance in solving the program (motivation in its own right) but also makes them owners of the results. Very powerful way to enlist change in an organization.

One thing I'd caution on is the use of cash as the reward mechanism. Your post doesn't explicitly mention the payout as income, I'm assuming it was. It may/could backfire.

I posted here...
http://incentive-intelligence.typepad.com/incentive_intelligence/2007/07/unintended-cons.html
...on the problem with using cash rewards in a program that has goals that over time, will become more difficult to attain - or - by virtue of the program - impossible.

Using non-cash awards (or at least reducing the amount of cash in favor of non-cash) lessens the impact on the employees income as their award values fall due to having to hit increasingly more difficult goals.

As with any program that is structured to "reduce" something (versus increase something) there is a lower limit to the reduction after which there is no reward. Using cash rewards in these instances can cause people to game the system to guarantee an increased income stream.

Paul:

I also assume that the programs described were cash-based. You raise some thought-provoking points about the use of cash versus non-cash rewards. As someone who works primarily with cash-based rewards, I am probably not as well schooled in the other type as you are. There is no denying, however, (as you point out) that managing the delicate balance between goal (how tough) and award (how much) levels always poses a challenge as we work to maintain plans that continue to positively impact both motivation AND ROI over time.

Thanks - as always - for the thoughtful comments.

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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