You’re Getting a Bonus! So Why Aren’t You Motivated?

An interesting article from HBR You’re Getting a Bonus! So Why Aren’t You Motivated? lays out  two factors that reduce effectiveness of bonuses as a motivator in R&D teams.  R&D managers must keep both in mind while determining the best way to motivate teams into improving performance – especially when teams are virtual.

1.The connection between values and behavior. Typically, bonuses are tied to financial achievement —they’re paid out when a certain benchmark is hit such as yearly company revenue, earnings per share, or department revenue targets. But the connection between the outcomes you truly value and the behaviors you want to see from employees can be far from obvious.

This is very true in large R&D organizations.  I have worked with many companies were even large bonuses did not encourage right behavior because there was no direct link between individual performance and bonuses.  Several companies attempted to address this using a flow down of corporate performance requirements into individual goals.  However, this is extremely difficult to do – how does one link a success of a research project that may enable a new subsystem which in turn might have an impact on several future products to bonuses?  Even when the bonuses were tied to behaviors, the second problem prevented good outcome: 

2.The connection between a worker and his/her direct supervisor. Plenty of research has shown that the most important influencer of workers’ performance, for better or worse, is the dynamic between them and their bosses. For example, research into workplace deviance by Lance Ferris of Singapore Management University shows a higher level of outright deviance among employees who feel they’ve been treated rudely or unfairly by their immediate supervisors. By the same token, there is nothing more motivating than recognition that comes directly from the higher-up who knows your work best: your manager. At that close range, a reward is a relationship-builder. Administered more remotely, as bonuses are, it’s only a transaction.

I would add to this factor:  In several companies, the bonuses were decided at the division level and the supervisors were just handed a “decision” to communicate.  This made it quite difficult for the supervisor to even explain rewards, much less guide behavior!  May be it is time to consider other approaches to motivate teams?

Spurring Cross-Functional Integration

Journal of Product Innovation Management has an interesting article on Spurring Cross-Functional Integration for Higher New Product Performance: A Group Effectiveness Perspective.  The article recognizes, that cross functional integration is crucial, but difficult to do:

Firms are increasingly assembling cross-functional new product development (NPD) teams for this purpose. However, integration of team members’ divergent orientations and expertise is notoriously difficult to achieve. Individuals from distinct functions such as design, marketing, manufacturing, and research and development (R&D) are often assigned to NPD teams but have contrasting backgrounds, priorities, and thought worlds. If not well managed, this diversity can yield unproductive conflict and chaos rather than successful new products.

The paper lays of the result of a formal study based on group theory that scientifically validates that cross-functional integration does have a positive effect on R&D effectiveness:

The model developed from this theory was then tested by conducting a survey of dual informants in 206 NPD teams in an array of U.S. high-technology companies. In answer to the first research question, the findings show that cross-functional integration indeed contributes to new product performance as long conjectured. This finding is important in that it highlights that bringing together the skills, efforts, and knowledge of differing functions in an NPD team has a clear and coveted payoff: high-performing new products. 

The study finds that two types of factors impact cross-functional integration:

Specifically, social cohesion and superordinate identity as internal team factors and market-oriented reward system, planning process formalization, and managerial encouragement to take risks as external team factors foster integration.

Authors recommend that BOTH factors need to be addressed effectively to integrate teams:

These findings underscore that spurring integration requires addressing the conditions inside as well as outside NPD teams. These specialized work groups operate as organizations within organizations; recognition of this in situ arrangement is the first step toward better managing and ensuring rewards from team integration.

Clearly, internal factors are much more difficult to address in diverse teams that are dispersed across multiple locations.  In fact, it is very difficult to get virtual teams to believe that they are a single organization.  That is where R&D managers can help!