A rewarding challenge for employers

Much has been written in recent months on the question of whether rewards can really motivate employees. Leading academics, such as Alfie Kohn writing in the Harvard Business Review, argue that performance incentives inevitably degrade employees by focusing attention on the reward.

The result is that rewards only motivate employees to achieve the reward - take away the reward and the system collapses.

Other commentators would strongly disagree and argue that a society without rewards would be as bland as old-style communism. The answer probably lies somewhere between these two extremes.

It is perhaps more useful to analyse the position from a different perspective. Rather than entering into a debate as to what motivates, turn the position on its head by analysing the only group of individuals who are demonstrably motivated - the self- employed - and see whether this can be replicated in corporate Britain. I call this process 'unbundling ownership'.

So what then is ownership? What makes the owner of a business motivated? Speak to any owner of a business and they will tell you that they are motivated by the freedom they have to control their own destiny. This can then be subdivided into accountability, responsibility, control, reward and risk. Rarely will the owner of a private business put financial reward at the top of the list.

It is for this reason that many companies are experimenting with empowerment. Empowered employees are better employees. To quote Hertzberg: 'If you want an employee to do a good job, give him a good job to do.' But empowerment by itself is not enough. The owner of a private business does not work for job satisfaction alone. He also has his eye keenly on the financial reward. It follows therefore that the 'unbundled' company must have some form of performance-related incentive. But how do we achieve this without turning our empowered employees into workers motivated solely by money?

Freedom

The challenge for British management is as follows: if you truly believe in empowerment, prove it - allow the employees to design their own incentive scheme. This is not to suggest that management abrogate responsibility. Rather, management and employees should work together to design a performance- based system that is both fair and appropriate to the organisation. Any incentive scheme that is imposed by management will inevitably fail to a greater or lesser extent. On the other hand, any incentive scheme designed by the employees themselves will have widespread acceptance from the workforce.

Interestingly, the level of monetary reward is probably the least important issue. The very fact that the employees participate in the design process will increase motivation. Money may not be an efficient motivator, but the lack of money is clearly a demotivator. As George Bernard Shaw once said: 'The lack of money is the route of all evil.'

Although the concept of allowing employees to design their own incentive scheme is radical, it has been used successfully in the US for a number of years, where it is called gain sharing. Many US companies operate gain-sharing schemes, which are designed along the participative lines I have described. Gain-sharing schemes originated in manufacturing but have more recently spread into service companies and the health sector. In the UK many human resource directors are actively studying gain sharing, though until now very little has been written about it here. But while the concept may be new in Britain, it is unlikely to stay that way for long.

Top-level education

Companies wishing to install such a plan will need to open up to internal inspection from their own employees. Radical reward strategies cannot be introduced overnight and the first stage must be some form of management education - for example, through on-site workshops.

The next stage is to develop strategic plans in conjunction with the company's senior management team. The aim here is to create an overall philosophy to guide the reward strategy.

Post-launch monitoring and evaluation also need to be carried out.

The author heads the Employee Benefits Practice at Arthur Andersen.