Incentives complexity


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Avoid inflation of incentives if you wish to avoid running an organization of glass

Published in: Business, Technology
  • Dr. Rod King wrote an insightful comment on this presentation and with his grand permission I copy and paste the comment. It is a great comment indeed
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    Group: The Business DNA Map for Visualizing Blue Ocean, Lean, and Luxury Enterprises
    Discussion: Value Disruption and incentives might seem two distant fields; in reality they are not
    Thanks for your above comment. Please feel free to use my comments regarding your great presentation. You have my permission to copy and paste my above comments.


    Rod King, Ph.D. • Ali,
    Great exposition on and analysis of using incentives in organizations. Like with many phenomena in life, incentives have the effect of diminishing returns. In the language of the problem-solving methodology of TRIZ, we can say that incentives inherently have a (physical) contradiction: on the one hand, incentives should exist in order to increase productivity and performance. On the other hand, incentives should NOT exist in order to avoid inequities or disparities among employees which eventually leads to decrease in employee productivity and performance. So, what can we do to eliminate this physical contradiction regarding incentives?

    TRIZ offers many tools for generating ideas that resolve a physical contradiction. The most direct tools are called the 4 Separation Principles. For the physical contradiction of having incentives and NOT having incentives, we could generate further ideas by exploring the following primary ideas:

    #1: Separate incentives in SPACE: give incentives in some areas but not in others (this is similar to the approach in your presentation)

    #2: Separate incentives in TIME: give incentives at different times or phases

    #3: Separate incentives in STRUCTURE: differentiate incentives based on parts or the whole of a job; for instance, give team-based incentives rather than incentives based on the performance of individuals

    #4: Separate incentives upon CONDITION: tie incentives to certain conditions so that incentives are triggered or come into effect when certain thresholds of individual/team productivity are attained
    Well, I hope that you find interesting the above ideas.
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  • @ah_livia
    Great comment, dear ah_livia. You are very honest in your comments. Charles Prabakar has plenty of fertile ideas and deep ones too. Yes, reading with attention makes his idea very dear. George and Abhishek differed to some extent with my views. That really helped and diversified the discussion
    To me, comments are the blood for authors. I do not say positive comments. They are a great venue for the exchange of knowledge
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  • “Incentives Complexity” comments section showcases one of my most FAVORITE viewer comment roundtables on SS!!! Charles’ comment, though usually too exhaustive for my taste, adds an interesting component to the discussion. I enjoy slowly sifting through his words until I reach his profound interpretation. While I loved reading everyone’s comments and Ali Anani's thoughtful responses; surprisingly I appreciated Abhishek and George’s comments the most. Why? Because they offered a different spin on the subject. Their comments made for a full & diverse roundtable discussion. I really, really wish SS would acknowledge the benefit of viewer discussion, and how Ali Anani's work facilitates lively viewer discourse. Good job Ali Anani thanks for keeping us (the viewers) engaged and talking!!! :)
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  • @kanelori
    Nothing speaks louder than actions. Sacrificing a huge salary to be yourself and belong to where you find yourself is the best example that money is not always the main driving force.

    I hope readers read this comment and respond as well. Thanks, Lori for such an illuminating comment.
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  • Hi Ali, thanks for a thought-provoking presentation as always.You mentioned to me that I am a person who left a 6-figure job. This is true. I valued learning in and working with/for my local community, and for myself, over money. I don't have much to add to the already amazing comments here, except to say that knowing people as more whole beings--and knowing what those around us most need and want in any given moment--feels like a remarkably worthwhile pursuit. Many people today are waking up to the fact that money isn't what we're most after, or most need. For me, it was community, connection, greater closeness to those around me. And it wasn't my employer who was going to give this to me, I had to find it--and you--for myself, with the help of many supportive friends and family. Thanks Ali!
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Incentives complexity

  1. 1. Incentives Complexity
  2. 2. Incentives may have a sweettopping; but underneath they may be deleterious
  3. 3. How?
  4. 4. Let us start on ourdiscovery journey
  5. 5. There is complexity in motivation and thiscomplexity warrants greater attention
  6. 6. The motivation to give incentives will work up to acertain range (optimal range). Say, somebody welcomesmonetary incentives. This is correct up to a limit, whenthe same person might seek different incentives such asmore work responsibility.
  7. 7. There is a switch over of preferences
  8. 8. A second point is the realization thatthere exists a feedback mechanism that might lead to non-linear results.
  9. 9. Giving more money to an employee will motivate him. This motivation increases hisproductivity and desirability to do more work,which in turn enhances his eligibility for more financial incentives
  10. 10. The Feedback Loop
  11. 11. These positive feedback interactions lead to surprising results that are non-linear
  12. 12. Imagine if same employees keep getting the majority of financial incentives
  13. 13. Big financial incentives create disparities These disparities weaken any system such as organizations
  14. 14. Eggshellswould be veryhard to break if they were thicker
  15. 15. Thick cementblocks are easy to break the moredisparity there is in their voids
  16. 16. Else, theorganization will become like…. Do not allow for disparity in your organization
  17. 17. ShuttersFragile Glass-Like Organizations
  18. 18. 1 more point
  19. 19. People futurerewards are basedon todays rewards
  20. 20. This may lead towidening the gaps within organizations
  21. 21. Beware of the inflation of incentives
  22. 22. Do not limit yourincentives to monetary ones; mix them with other incentives such as traveling