Metrics beat bonuses: How to motivate with measurement

As working professionals, we look forward to our paychecks because of our need to pay bills, put food on the table, and have a place to live. Paychecks arrive on schedule and are expected, similar to year-end cash bonuses.

In the Inc.com article, Metrics Are More Motivating than Bonuses, CEO Justin Moore differentiates between year-end bonuses and the positive effects of a performance-based recognition program. While there are many professions that rely on bonuses as part of their annual compensation package, an arbitrary year-end cash bonus can have little meaning to the employee and does not promote engagement. A performance-based recognition program, coupled with a compensation package, drives the behavior required to align employees with corporate goals. Through metrics encouraged by timely performance-based recognition, employees understand how their contributions affect the bottom line. There are three ways to ensure metrics are done properly:

  1. Measure the Correct Things:

It’s important to measure specific goals that will contribute to your organization’s success. What does the big picture look like and how do we get there? Set specific goals and check progress often – daily, weekly, or monthly at the latest. By the time the quarter ends, it will be too late to salvage losses resulting from a lack of follow-up.

  1. Have Employees Set their Own Metrics:

Managers should ask employees to come up with specific metrics, which will hit targets to drive results. If you empower employees to be in the driver’s seat and make decisions that affect their success, then they are more likely to be ambitious and set stretch goals that push their limits. When employees feel like they are in control and have management support, they are likely to be engaged and hit targets based on specific metrics.

  1. Review and Reward

Public recognition is crucial when it comes to reviewing metrics and rewarding performance. If you want employees to exhibit behaviors required to drive results, then it is necessary to publicly recognize these behaviors in order to drive engagement. Metrics are a great tool to measure progress – so if you publicly reward metrics, employees will eventually achieve the end goal.

A genuine, sincere recognition goes a really long way, and is not necessarily tied to cash. Employees will be more motivated to achieve results because of the recognition they receive along the way, which affirms they are on the right track. A cash bonus received at the end of the year is not tied to daily, weekly, or even monthly metrics – it is just a measurement of something determined one year ago (which has probably changed since then.)

Do you agree that recognizing and rewarding progress is a better indicator than the cash bonus?

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