Avoiding Labor Management’s Missteps: 5 Things That Can Sink Your Incentive Program

Avoiding Labor Management’s Missteps: 5 Things That Can Sink Your Incentive Program

By Jeff Boudreau

So maybe you didn’t aspire to be the world’s most inspiring and motivating boss. You certainly don’t want to be part of a corporate program everyone hates. The atmosphere around labor-intense business operations—distribution, manufacturing, customer care, field service and the like—is changing. Labor market shifts, millennial attitudes about engagement, and updated capabilities of labor management systems (LMS) make achieving a high-performance work culture an interesting challenge. Given this, it's no wonder that 63% of firms using incentives reported gains of 10% - 30% in productivity - but some did not. In either case, the intrinsic factors underlying human motivation remain timeless.  Operating executives cannot simply rely on systems, automation, or diligence of a few outstanding employees to deliver all the results their companies need to remain competitive, profitable, and an appealing place to work.

Below are five missteps you need to avoid unleashing a program that your team will love to hate.

1.     Bureaucracy and Policies:  You work hard to attract and retain talented and dedicated staff.  Your company brand, operating conditions, wages and benefits, coworkers, interpersonal relationships with supervisors, and the nature of the work itself all contribute to an overall perceived value for associates. As they dedicate their hard work to the task, over time they build more and more internal commitment. For many, work life is central to their identity and sense of self.  Unfortunately, most incentive programs are only partially aligned with that identity and end up undermining their commitment. Too many times we see incentive programs haphazardly thrown together with policies, rules and concepts that can frustrate employees and conflict with their social identity to their work group.

2.     Conflicts with Personal Motivators: There is real-time computing happening every day in your operations—and it is not what you think. No, it is not your business systems trying to optimize inventory with the latest machine learning. Rather, your associates are evaluating their sense of investment and effort with their reward; and then comparing it with that of their coworkers. Behavioral psychologist J. Stacey Adams tested this concept and found this perception of fairness to be pervasive and a powerful influence on employees.  We witnessed this ourselves in a large direct-to-consumer operation that had just rolled out a team incentive program. While the payouts were lucrative (some groups overachieved and banked incentive pay far into the future), the overall perception was dismal. In fact, a company survey found that due to several structural issues and poor supervisor accountability, the team incentive was the least liked feature of employment.          

3.     Leading from the office: This may surprise you—unless you have tried it. LMS vendors often tout the features of their systems to automatically sense and respond to real-time conditions in your workforce. Why not take advantage of the discrete tracking and real-time RF communications available in a distribution center call center or on the road? Say for example, a lift truck driver is taking longer than the LMS predicts it should take her to complete a transaction. When this happens, an alert is sent, usually to the supervisor alerting him of the infraction. Neat. Now you will not miss appointments or volume projections for the day right?  While in theory that is the intent, in reality, there are two problems: First, real time reporting gives managers the false sense of empowerment to run operations remotely. Second, real time reporting tends to over-report normal variations in daily activity.

4.     Our road ahead is blocked: Why do some people seem to flow in their jobs, getting stuff done and feeling good about it? How can that be when their jobs seem less than inspiring?  Amabile and Kramer in a Harvard Business Review article revealed that what really happens on a good work day is—progress—getting stuff done. This outranked doing important work, collaboration and getting support. Not surprising, this builds on work done by Frederick Herzberg a half century ago that true motivators include a sense of accomplishment and taking responsibility.  How does this relate to your incentive program? A comprehensive labor management program, with incentives, should be the basis for clearing obstacles and achieving ever better performance.  Working faster is not the key. Creating the conditions to work unobstructed unleashes a fulfilling experience.

5.     Is this just another ‘flavor of the month’: Whether scheduling a carpool or putting money in the bank, people crave certainty.  Sure, creating a performance-focused work environment is a journey, but not one to do by trial and error on your staff.  Installing the LMS is not a plan. Developing engineered labor standards is not a plan. Piloting incentives on a few departments is not a plan. Instead, these are timid steps management often takes to avoid making a commitment they cannot back out of. Unfortunately, these schemes are perceived as just that - ad hoc initiatives that will wither once management’s attention gets pulled to the next urgent matter.

Remember, incentive programs are optional—and therein lies their biggest risk. Creating a fair and well-structured program with a clear long-term vision, engaged management, and a commitment to make everyone successful can be the foundation for a program they love, and one that delivers those enticing financial benefits year after year.

To Learn More About Incentive Programs, click here to see the full ProMat 2017 presentation.