Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Dr Claire El Mouden on why KPIs and annual bonuses are a waste of time

1,865 views

Published on

Slides from Dr Claire El Mouden's keynote at Passle's first Hero Academy.

Published in: Business
  • Be the first to comment

  • Be the first to like this

Dr Claire El Mouden on why KPIs and annual bonuses are a waste of time

  1. 1. WHY KPIS AND ANNUAL BONUSES ARE A WASTE OF CLAIRE EL MOUDEN
  2. 2. Deloitte Seminar, 2013 ‘Motivating top management through well-structured pay’
  3. 3. Boston Consulting Group, ‘Decoding Global Talent’, 2014.
  4. 4. RATIONAL CHOICE THEORY
  5. 5. ECONOMICS
  6. 6. NEUROSCIE NCE PSYCHOLOG Y ECONOMICS ANIMAL BEHAVIOUR BEHAVIOUR AL ECONOMIC S EVOLUTIONA RY BIOLOGY
  7. 7. NEUROSCIE NCE PSYCHOLOG Y ECONOMICS ANIMAL BEHAVIOUR BEHAVIOUR AL ECONOMICS EVOLUTIONAR Y BIOLOGY
  8. 8. RATIONAL CHOICE INFORMATIVE repeated time to decide can learn what works instant reward RATIONAL CHOICE INAPPROPRIA TE one off stressed uncertain world delayed reward
  9. 9. NEUROSCIE NCE ECONOMICS ANIMAL BEHAVIOUR PSYCHOLOG Y BEHAVIOUR AL ECONOMICS EVOLUTIONA RY BIOLOGY Overconfidence bias Bandwagon effect Availability bias IKEA effect Confirmation bias Authority bias Hindsight bias Loss aversion
  10. 10. Deloitte Seminar, 2013 ‘Motivating top management through well-structured pay’
  11. 11. PERCEIVED VALUE ≠ ACTUAL VALUE TIMING MATTERS WE ARE SOCIAL ANIMALS
  12. 12. MAKE INCENTIVES APPEAR MORE VALUABLE We are more bothered by losses than gains ‣ “you already have a bonus, just do X to keep it”. We are attracted by big prizes ‣ instead of £5000 bonus, enter 50 employees into a lottery for £100,000 (costing you £2000/employee) People value gifts more than cash ‣ instead of a £5000 bonus offer your employee and her boyfriend a 5* long weekend in Barcelona (costing you £2000).
  13. 13. MAKE INCENTIVES TIMELY We discount the future ‣ Link financial incentives to short term goals People are more likely to do a behaviour if the costs/benefits are imminent ‣ Remind people when they have 24 hours left to do something. People are receptive to change long-term behaviours when in transition (e.g. new job, new office, new house) ‣ If you want to new policies that change the office culture to work, switch desks or work schedules at the same time?
  14. 14. MAKE INCENTIVES SOCIAL Reward employees with social prestige instead of money ‣ public praise (e.g. a plastic trophy) ‣ personal email from the CEO ‣ we copy socially prestigious individuals (so reward the right people). Focus competition between groups not individuals, particularly in stressful periods People conform to the (apparently) most common behaviour (careful not to make ‘problem’ behaviours worse!) ‣ e.g. “Most employees complete their timesheets on time” Share rewards with the family, not just the individual
  15. 15. DEFAULTS TIMELY PRAIS SOCIAL CONFORMISMFUTURE DISCOU
  16. 16. NEUROSCIE NCE PSYCHOLOG Y ECONOMICS ANIMAL BEHAVIOUR BEHAVIOURA L ECONOMICS EVOLUTIONA RY BIOLOGY THE FUTURE Scrap annual bonuses and generic KPIs Tailor incentives to an individual’s circumstances, personality and goals Use behavioural insights to communicate the right information at the right time to motivate employees
  17. 17. I’M DONE NOW IT’S YOUR TURN

×