Rewarding Innovation

Is it necessary, or even right, to reward staff specifically for thinking innovatively?

Last week I had an hour to kill in an airport lounge and decided to contribute to an online discussion which had caught my eye.  The subject was: “How to reward innovation?”

There were some well thought out comments asking the question: why should we reward innovation over and above any other aspect of employment? While I have a lot of sympathy with this view, I also believe that singling out “Innovation” in particular for special monetary reward is tantamount to saying that being innovative is not part of the day job.  This is a view I totally disagree with.

Most of the discussion was about striking the balance between monetary reward vs. public recognition, and between individual vs. team rewards. This is where I had to jump in, because the focus was so blatantly mercenary.  The message is: if your innovative idea has saved the company $1,000, we’ll share that with you and then maybe someone else will have another idea.

Personally, I think this is a fundamentally flawed model which could quite easily lead to counter-productive behaviour.  I have, for example, seen Production teams launch new products with known, avoidable inefficiencies, so they can be “rewarded” for the improvement ideas later on.

So what is the behaviour we want to encourage?

If we agree Innovation is more than having an idea, but also requires follow through and results, and we also agree that implementing an idea takes teamwork, then it seems that we would want to create a reward system that encourages collaborative effort that converts good ideas into something tangible.
Furthermore, by focusing on sharing ideas, challenging those of colleagues, as well as the teamwork that turns ideas into innovations, it creates a more stimulating environment, and one that is more likely to yield results.

Ultimately, incentivising the work of teams is much more effective and less controversial than financially rewarding an individual, and a collaborative environment is likely to continue to generate rewards in and of itself going forward.