Perspective # 8 - Show me the money

Show me the money: It is a common belief that employees come out with ideas only if the ‘what is in it for me’ aspect is taken care of. In other words offer carrots to employees that are usually a percentage of benefit accrued due to the Idea.

Often this arrangement backfires. It is usually hard for corporations to exactly measure the benefits and this can result in lot of heartburn. In fact there are many lawsuits filed in US over the ‘percentage dispute’ – a high profile case to quote involved an United Airlines employee suing the company, claiming that the percentage calculated was unfair and the case went on for 20 years.

Vijay Govindarajan in his book Ten Rules for Strategic Innovators warns that linking pay too closely to hard innovation measures may tempt managers to game the system. A metric such as the percentage of revenue from new products, for instance, can lead to incremental brand extensions rather than true breakthroughs.

In addition, innovation is such a murky process that targets are likely to change. To quote ‘Ideas are free’- "It is one thing to realize that employees don’t have to be bribed to give in ideas. But one might think that the prospect of getting a share of benefits from their ideas would only increase their natural motivation. In practice, most such schemes backfire. The more money a company dangles in front of its employees, the fewer ideas it gets, and more problems it creates for itself."