Idea Storm Blog – Rewarding Ideas



This week my blog is going to cover rewarding ideas within an organization. Let me begin by saying that there is a lot of articles discussing idea rewards but there doesn’t seem to be a definite consensus on how best to manage rewards. I will reference these articles within this blog and give a list at the end of the blog.

Every idea needs to be acknowledged.

Adoption and use of an Idea Management process within a company is a continuing process and battle. One of the major reasons why employees stop using an idea management solution is that ideas they capture don’t get rewarded, or even acknowledged. Every idea that an employee takes time to think through and capture into an Idea Management system needs to, at the very least, get an acknowledgement that their idea has been read and validated.

This is the reason that properly constructed idea challenges are so important because the ideas received will hopefully match a communicated need and will be of sufficient quality to be evaluated. This means that the employee will see that their ideas are being acknowledged and will continue to add their ideas into the system.

Considerations for reward systems?

Creating an Idea reward system is a complex exercise and I would like to reference other research and articles in trying to find an answer.

“The perils of idea reward systems – InnovationTools.com”

For many executives, it seems to make intuitive sense: If you reward employees financially for contributing their ideas, they will contribute more of them, right? Not in many cases, according to Alan Robinson and Dean Schroeder

Here are some of the ways that idea reward systems can go wrong:

  • The problem of accurate measurement: For many ideas, it is all but impossible to accurately measure their value.

  • Rewards cause idea myopia: Employees will tend to focus on ideas that promise an immediate payoff, while ignoring other, possibly more significant, long-term opportunities

  • The problem of fairness: Many corporate idea programs only reward the person who initially submitted an idea. But most ideas are not submitted fully formed and ready for implementation.

  • Reward programs may tempt managers to behave badly: The potentially large sums of money involved in some corporate idea reward programs can lead to an ethical behavior and even fraud.

  • Reward programs can create unnecessary overhead: Most idea reward systems require “an evaluation process to estimate projected savings from each idea, an arbitration process to settle disputes over these calculations, and an audit process to make sure that the reported savings are accurate.”

“Don’t offer employees big rewards for innovation – Oliver Baumann and Nils Stieglitz”

It stands to reason that if you want your employees to come up with high-powered ideas, you need to offer high-powered rewards. That’s why Google created its Founders Awards to provide stock worth up to several million dollars as an incentive to innovation.

But our research shows that high-powered rewards are no better than low-powered incentives at producing radical innovations. They may generate excitement and high hopes, but they result in few breakthrough concepts.

High-powered incentives do produce a flood of ideas, but that’s not necessarily a good thing—a flood can be overwhelming, leaving companies unable to act on many of the ideas. You’re better off implementing low-powered rewards, which are much cheaper and yield a more manageable stream of ideas.

The basic question that motivated our research—Should firms reward their employees for innovative ideas?—is far from settled, even after years of research. Various management scholars, for instance, have argued that rewards are hard to administer and may corrupt employees’ motivation and creativity. Nevertheless, many firms continue to reward good ideas: 3M and Google allow employees to spend 15% to 20% of their time on projects of their own choosing, and other companies actively solicit suggestions or stage innovation tournaments.

Different types of rewards

So if the default large financial reward is not an automatic answer as a reward then what types of rewards could be used.

“11 non-traditional ways to reward innovative employees – Lisa Bodell”

This article discusses different approached to idea rewards that could be considered.

Compensation:

  • Peer-to-peer rewards — At Zappos.com, employees award cash bonuses to other colleagues.

  • MVP rewards— Employees at biotechnology company Genentech are acknowledged for going over and above job responsibilities with a check ranging from $1,000 to $2,500. Even if this level of compensation isn’t feasible for your own organization, determine a range that is and build it into your incentive program.

  • Patented rewards — Samsung has financially rewarded employees who submit patent applications on its behalf, as well as team members who apply the new technologies to its products.

Gifting:

  • Experiential rewards— Westin (part of Starwood Hotels) has been known for awarding an exotic, five-day trip to the employee with the quarter’s best idea. If vacation packages aren’t a reality for your business, consider awarding extra vacation days instead.

  • Prestige rewards— Managers within ad agency DDB Worldwide send bottles of premium champagne to employees who exceed expectations on an account or project.

  • Virtual rewards— The UK’s Department for Work and Pensions encourage ideas from employees through a gamification platform called “Idea Street.” Points are earned for submitting and further developing ideas. Employees can also invest their points into promising ideas and if these ideas are implemented, more points are earned. Within 18 months of its launch, Idea Street had approximately 4500 users and generated 1400 ideas — of which 63 moved into the implementation phase.

Recognition:

  • Failure reward— Intuit hosts a company-wide award ceremony at which the “Failure Award” is bestowed on a team whose unsuccessful idea resulted in valuable learning. When plastics company W. L. Gore & Associates kills a failing project, they host a celebration with beer or champagne, just as they would if the project had succeeded.

  • VIP rewards— When launching its “Great Performers” program, Honeywell featured the portraits and stories of top employees on posters that are displayed prominently across its offices. Within your own company, consider adding a prominent recognition category to your intranet — or a front-row parking spot designated for the “Hero of the Month.”

Perks:

  • Brag-worthy rewards— The culture at Thrillist Media Group is centered around a work-hard-play-hard approach, and the company pays it forward with a dogs-welcome policy, sporting events, and beer on tap.

  • Concierge-style rewards— Genentech provides on-site dog sitting for employees, and services like haircuts and weekly car washes.

  • Future-changing rewards— In conjunction with Arizona State University, Starbucks offers a free online college education for its part and full-time employees. In your own business, consider a tuition reimbursement program that allows staff to seek continuing education courses related to their current or potential next assignment within the company.

No two employees are alike

To further complicate a reward system is that employees within your company are different and will place different value on rewards.

“How to reward great ideas – Drew Gannon” talks about this in his article.

From its research and experience with clients, Maritz postulates that the best reward programs involve purposeful choice on the part of both employees and employers. Roughly only 30 percent of employees who want to be recognized in a certain way – for instance with cash bonuses, public recognition, or symbolic awards – are recognized in that way. Communication about what employees want versus what the company is able to provide helps determine the best options.

"Rewards always need to be meaningful, memorable and motivating, but there's not a one size fits all solution," Barbee says. "By offering choice to your employees you get much more engagement and can drive the kind of results that they want."

Open and frequent communication with Firstborn's 70 employees is a key part of how the agency determines its reward policies. "Some people need that time away more than others. Others may want a nice bonus instead," LaCivita says. "As a company you employ individuals and you are a team, but at your core you're still individuals with different feelings and different needs. You really need to talk to everyone and know who they are as people to really know how to reward them."

You need a reward system

While there is a debate on how a reward system should be implemented, it is universally agreed that a reward system is essential for the continuation and health of an idea management system. Your company needs a reward system but one that is specific to the needs and culture of your company.

Idea Storm can work with you on constructing an Idea Management process that includes suitable rewards. To discuss this with me, or share your thoughts, then please send me an email to lance@ideastorm.co.za

References:

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