Innovative Incentive Programs Can Improve Your Team's Performance

As companies grow, one of the challenges they face is scalability. Can a successful organization continue to provide outstanding performance at higher levels of demand? With increased growth, the greatest challenge can be maintaining the commitment to the principles that originally created success for the business. Excellent customer service and consistent quality are the core competencies for our law firm. To manage high levels of growth, we have increased our focus at staying true to the promises and skills that distinguish our firm in the marketplace. Consistent performance of core principles is essential to maintaining the level of service and excellent results that have created our success. It simply requires innovative approaches to remain committed to your core principles and values as your team grows.

As a growing organization, our law firm is always looking to reinforce exceptional behavior that is consistent with our core principles. There are three approaches growing businesses can take. The first is to do nothing and hope the new team members master the core principles on their own. This never works and very quickly you will no longer have to worry about a growth problem. The second choice is to keep people in line with strict rules, threats, and punishment. Human beings rarely respond well to threats of punishment or termination. Fear is not a healthy motivator for excellence. The third choice is to implement an incentive program that reinforces desired behavior. It is far more effective to develop a system that rewards positive behavior than just punishing negative behavior.

Developing an innovative incentive program for our team has been helpful in reinforcing the core principles and help us all perform at high levels. We also love to reward and celebrate our hard working attorneys and staff members who help us keep the consistent quality and customer service promises we have made to our clients.

Here are two important questions to consider as you look to develop an innovative incentive program to keep your growing team committed to your core principles.

1. What behavior will you choose to reward?

The benefits of rewarding desired behavior are well noted. But choosing what behavior to reward is an important decision for every organizational leader. You reward what you want to see more of. Recognize, celebrate, and reward the activities that help your organization succeed and your team members feel great about achieving common goals.

The best incentive programs reward activities and behavior that inspire exemplary and meaningful accomplishments. You want to develop a program that rewards the team for excelling at the skills that distinguish your business in the marketplace. Incentive programs that are inherently transactional in nature are not as effective as incentive programs that are inspirational.

A transactional model is one where the business owner says to the employee, “If you make me more money, I will share some of that extra money with you.” It is incredibly short sided to reward people for doing tasks that only benefit the owners of an organization and do little for the team members responsible for the success. It is for this reason that Gilson Daub has never bonused our attorneys for billing. The practice is common in the legal industry but bonus for billing programs are entirely transactional and actually work against inspiring meaningful accomplishments. By definition, they reward attorneys for billing clients more than the attorney would have normally billed absent the billing bonus program. Even if a program could eliminate all dishonest and inflated billing, a bonus for billing model only promotes the financial interests of law firm ownership and appeals to an associate’s desire to make more money and is therefore 100% transactional and not inspirational. More billing does nothing to improve the lives of the attorneys. I have also yet to find any connection with higher billable hour thresholds and better results for clients. Bonus for billing programs would work against our clients’ interests in obtaining efficient, predictable, and fair legal costs. Most importantly, bonuses for billing programs do nothing to inspire meaningful accomplishments.

It is a fact that you will get more of whatever it is you incentivize. Clients who use firms that incentivize attorney billing will see greater billing from those firms. We have instead chosen to bonus our teams for meaningful accomplishments that our clients actually want from their attorneys. We bonus our teams for closures, customer service, exceptional character, and excellent results. As a result, clients are getting more closed files and better service from a legal team that is not overworked. Human beings do not want to be valued solely for the monthly billable hours they produce. No one goes to law school or feels any real sense of accomplishment for being a “top biller” in a bonus for billing firm. People want to be celebrated and recognized for doing something meaningful. It feels fantastic to help a client get resolution on a complicated file. The reward is given for the accomplishment of closing a case not in billing the client a lot of money. Which is why we have designed our incentive program to encourage activities that our clients prefer and our employees are proud of.

Whatever you chose to incentivize is specific to your industry and ethical model but what you choose to reward tells your customers and employees your true priorities. Choose wisely. 

2. How will you choose to reward your team?

Many incentive programs focus only on financial rewards. Innovative leaders look to other ways to reward team performance rather than just throwing money at them. Instituting an exclusively monetary incentive program again tells your employees what is most important to you. If money is most important to you, then that is the language you will speak. 

The incentive research of Stajkovic and Luthans immediately caught my attention because our firm has experimented with various financial and non-financial incentive programs. Our leadership team regularly evaluates the effectiveness of our incentive programs because it is difficult to find a single incentive program that works for everyone. It makes sense that different reinforcing contingencies produce different effects between diverse groups because of the differences in their unique reinforcing potential. One size fits all programs can leave an important part of your team feeling unimportant. It is not only permissible, but probably necessary, to construct different incentive programs for your diverse teams. The researchers utilized several reinforcement methods including financial interventions, (money or prizes), nonfinancial interventions, (performance feedback), social rewards (recognition and attention), and then combinations of the each of the above (Stajkovic & Luthans, 1997).

All four types of reinforcement interventions produced significant results. The service organizations’ financial rewards produced a significantly stronger effect than nonfinancial interventions. However, when social rewards were used in combination with nonfinancial interventions, such as performance feedback, the effects on performance significantly improved even beyond the effect produced by financial rewards alone. In some instances, when financial rewards were used in combination with nonfinancial contingencies, such as performance feedback and social rewards, the monetary rewards actually diminished the effect of the intervention.

Our firm utilizes a combination of all three reinforcement methods to celebrate exemplary work. We provide personalized feedback through regular performance reviews and ongoing leadership coaching. We provide social rewards through peer recognition during our monthly meetings. We also provide financial rewards in the form of performance bonuses for settlements, closures, and demonstrating exceptional character.

Before you immediately institute an incentive program, consider that financial rewards might diminish the effectiveness of the reinforcement intervention as suggested in the study. Look for creative and sincere ways to help people feel great about doing great things.

If you already have a bonus or incentive program in place, I recommend reevaluating the effectiveness of your program. 

  • What behavior are you trying to see sustained and increased?
  • Is that a behavior that allows leadership, customers, and your employees to all pull in the same direction or is it limited to only increasing profits? 
  • Does your program utilize financial bonuses, specific feedback, and social rewards systems?
  • What combination of incentives work best for your differing teams?

I believe our incentive program remains one of the most innovative in our industry. But I also believe we can improve our effectiveness by being more specific and frequent in providing personalized feedback to our team. I believe we can also improve our social rewards through looking at greater recognition programs at the local team level. We are unveiling a new recognition program to celebrate star performers in a “get to know your team member” style article. Being innovative means always looking for ways to improve, especially when programs focus on increasing hope, optimism, and resilience of the team. These qualities have been shown to positively improve the work-related outcomes of job performance, job satisfaction, work happiness, and organizational commitment (Youssef & Luthans, 2007).

Brent Daub is the Senior Partner at Gilson Daub, Inc.

References:

Stajkovic, A.D., & Luthans, F. (1997). A Meta-Analysis of the Effects of Organizational Behavior Modification on Task Performance, 1975-95. The Academy of Management Journal. 40(5). 1122-1149.

Youssef, C.M., & Luthans, F. (2007). Positive organizational behavior in the workplace: The impact of hope, optimism, and resilience. Journal of Management. 33. 774-800.

Kelly Daub

Gilson Daub, Inc., 34270 Pacific Coast Highway, Dana Point, CA, 92629