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With the new year comes a new set of business goals and likely a new set of personal performance objectives for your team. If you work in sales, you probably have a new boss, too. With the best of intentions, most organizations I’ve encountered set the incentive structure in a way that leaves company profit on the table and erodes personal initiative. Before your team adopts Homer Simpson’s work ethic, use my 4 tips below to adjust your incentives

Any team will consist of high-, average-, and low-performing individuals. The modern incentive toolkit has two main features: traditional “carrot and stick” incentives that keep everyone accountable, and others tapping into intrinsic motivators that spur your top performers even higher. Daniel Pink describes these as autonomy, mastery, and purpose. And don’t depend on money alone as a reward. While Alfie Kohn takes an extreme view that pay for performance flatly doesn’t work, Michael Sturman’s research shows it is more about careful choice of how and how much you pay (hint: more than the competition).

  1. Create tiered goals to prevent “checking out” – For the core operational tasks in your organization, publish goals well in advance. Set rewards proportional to the minimum acceptable, target, and stretch levels. The metrics you choose for individuals should map clearly to overall business goals.
  2. The best rewards are unexpected yet consistent – Daniel Pink describes this as using “now that” rewards instead of “if, then” rewards. By providing recognition and non-monetary rewards (e.g., free lunch or a nice company fleece) to the people who embody the culture you wish to develop in the team, you will incite more of the same. When those rewards come as a pleasant surprise (but are completely unsurprising in hindsight), you are rewarding your best people for what they “would do anyway.”
  3. Small rewards for everyone, big for the best – Another variant on #1 above is to set a target for the group as a whole and also reward the top performers with a larger prize. This technique works particularly well when you have built a team with what organizational psychologists like David Hekman call high organizational identification and low professional identification. More simply, their sense of “I am Google” is stronger than “I’m an engineer.”
  4. Choose personal improvement areas from a list of company priorities – Lastly, ratchet up the sense of ownership for outcomes by providing choice. For example, provide your team members with the 5 key metrics for the business, and let them choose which 3 they will improve by 10% over last year.

It should be obvious that how you manage to targets matters (look for more on this topic in leadertainment). But carefully setting performance targets can avoid destroying both profit and motivation in your team.

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