Ditch Bonuses And KPIs To Boost Innovation

Many people hang out for their quarterly or annual bonus. But does pushing for people to meet fixed targets prevent them from considering more radical experiments that might deliver even better results for the business?

Picture Stuart Addelsee by via Gizmodo Shooting Challenge

In a feature examining the importance of recognising failure as part of the business journey, the Australian Financial Review quotes Andy Fallshaw, co-founder of startup investment group Investling, as saying bonuses can stifle the innovation and experimentation he sees as essential . "By taking out performance and key performance indicators, it leaves managers freer to try things."

It's not an attitude I'd expect listed companies to adopt in a hurry, but in a growing business giving people security and letting them experiment seems a worthwhile goal. What do you think?

Accepting failure on path to success [AFR]


Comments

    I'm not sure how this will work, but most of the companies I have worked for have bonuses. If you meet your target, you get up to 10%, but if you EXCEED your target, you get up to 20%. I do not see how this could stop innovation as they give us more incentive to do better, but that's just my opinion...

    Workplace goals are one of the strongest intrinsic motivators. If they aren't working, its because the KPI's are poorly chosen (i.e. too easy, too hard, not timely, not appropriate etc.)

    I work in a company where KPI's are used. They are meaningless for me and my co-workers as we are limited by our interaction with overseas, but seem to work just fine for all the other loafers out there who seem to reach their easily set targets. Really I find the whole thing is more about achieving KPI's than actually producing goods and solving problems. KPI's are easily fudged, you have to look at the whole picture

      Southpatt - then the KPI's (and the process to set them) in your organisation are wrong, not the whole concept of incentivising and motivating staff through targets and KPIs.

        And the question is how many organisations actually set them properly? In my opinion boiling down something complicated, like a job, into something simple, like some KPI numbers, is incredibly difficult to do well and very easy to do badly.

    The point is this, we need people to be able to take risks and sometimes fail! If you stick to achieving your KPI, you are following, by definition the "vision" of someone in HR 12 months old. How is this going to be innovative or risky or ultimately game changing!

    Exactly BrianFellOver

    As I found out on Monday, that our warehouse achieves their KPI's by screwing over everybody else

    This is a well known phenomenon and there is an excellent RSA animated talk on this about "The Surprising Truth About What Motivates Us":
    http://www.youtube.com/watch?v=u6XAPnuFjJc&feature=youtube_gdata_player

      +1
      I love this animated talk - highly recommended all managers see this!

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