What's an Incentive?

On the Influence Insiders blog talk radio show this afternoon, a very basic yet potentially puzzling question was brought to surface:

What is an incentive?

With HR and incentive industry pros (outside of Hinda) fielding the question, several different viewpoints came to surface. One interesting perspective including how many perceive base salary as an incentive. Most of the panelists agreed that this is a false perception. Not only was a base salary not an incentive by definition, but neither were annual cash bonuses. Todd Hanson described an incentive as an extrinsic way to modify behavior and improve engagement and that poor incentive design makes base salary diminish in value.

The next big question stemmed from defining an incentive to how to design effective incentive programs. Incentive programs, according to Paul Hebert of i2i, should not be designed to motivate outcome but to motivate behavior. Other points included how goals of incentive programs should be attainable, how an uttainable goal isn't really a goal at all and how the program should be dependent on the person doing the job, not on the product's performance. The group also brought up how incentive programs don't manage success on their own but are actually just one more responsibility for managers to oversee in order for those programs to work effectively.

After hearing brief summations of what the experts had to say, what do you think?

How would you define what an incentive is?

When should we use or not use incentives?

Influence Insiders is a monthly blog radio talk show hosted by Paul Hebert of i2i. Check out previous broadcasts at http://www.blogtalkradio.com/i2i