Incentivizing Change Programs

While we’d like to think that change is inherently rewarding, the truth is that most people need a little more motivation. If you’re embarking on a change management program within your organization, re-evaluating your incentive structure is a critical step—especially if your leaders have historically been rewarded for efficiency and growth, rather than sustainable change.

It’s one thing to show short-term improvement through accounting tricks and overworking employees, and quite another to make a lasting impact on the organization. So how can you make sure that you’re encouraging the right behavior?

Ultimately, your goal should be to design a system in which leaders anticipate a greater payoff for transformation, rather than continuing business as usual. The first step is to educate them about how the desired changes will benefit the company in the long run. Then, once they understand how these changes will impact the bottom line, you should reinforce this behavior by tying their compensation to the long-term performance. (Of course, this doesn’t have to be an all-or-nothing proposition: you should allow for short-term expenditures on innovation, as well as anticipate some mistakes as they try new approaches.)

A change-friendly incentives program can look like:

  • Steering towards stock options. Salary and bonuses are only motivating for as long as the leader stays with the company, while stock encourages longer-term thinking. And by offering stock, you don't have to think about metrics like growth targets or revenue goals—instead, the focus becomes long-term company performance, and leaders have the freedom to pursue it in creative, forward-thinking ways. 
  • Rewarding different results. If you do still want to offer bonuses, some changed-focused metrics include the number of new lines of business developed, the return on research capital (this year's gross profit divided by last year's innovation expenditures), or customer surveys that reflect on what you’ve tried to change. It’s also an opportunity to brainstorm with leaders—how do they want to be measured?
  • Thinking beyond monetary rewards. While fair compensation is important, leaders may be open to other incentives, like ongoing career development or speaking opportunities. Remember, if money is the only thing keeping people around, you may need to re-think your organization’s purpose—or find new people!

Of course, if you’re the leader in question and you’re trying to convince the rest of your team to change, you can still apply this approach. Can you work with HR to restructure your rewards system? Can you brainstorm with the team about what non-monetary rewards look like? Rewards alone won’t make the change happen, but they will reinforce the behaviors you want to see.

 
 

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