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?