How to create an Incentive scheme to boost Self Organized ...

The Issue

Creating an incentive plan or scheme in an organization is a tricky affair. Most don?t seem to get it right. As a result the desired goals are left unmet. So the top Management feels that they lost in the bargain. And surprisingly the employees also think the same that they have been unfairly treated or cheated by the scheme. Nonetheless it leaves behind a bitter taste that isolates Management from its most vital resource ? the employees.

What is known or desired by Management?

However, the aims of any well-meant incentive plan is clear; some of those being ?

a) Improve productivity through self organized improvement of efficiency and effectiveness of a production system.

b) Improve self managed quality as an inbuilt factor into any production system

c) Enables employees to quickly discover systemic faults in the production system and self correct those through self-initiated interactions.

What is Unknown by Management??

a) Management does not yet have a model to work out an incentive plan/scheme that is not only systemic but also self organizing to improve the system.

b) Presently management looks at bits and pieces of data to create work wise incentive plan that is applicable to an individual or a group or a department at most. It does not know how to create an incentive plan that would map and address both interdependence of different departments and their independence too.

c) The same goes for correctly evaluating or assessing the contribution of different types and grades of employees who work in various departments.

d) Management is also unaware of the type of data to look for that would not only help them create the right type of incentive scheme but also keep the inherent dynamics of the system, where the central idea is to create a dynamic incentive plan that helps the production system to be resilient rather than a static one, which can prove to be quite anti-resilient and limiting.

What is needed??

a) A clear understanding of the system dynamics.

b) The maximum and minimum potential of the system

c) What would be the stability zone to operate in and how to predict when instability sets in?

d) The inherent potential for the system to improve without any additional investment

e) The limit beyond which only additional investment can improve productivity.

f) The right parameters to be selected

The Resolution

The resolution to the above issue is depicted by the conceptual model as shown below:

Incentive Model

Results

This model (based on science of complexity) was applied to one relatively large Indian multi-national unit and the results were the following:

1. Productivity improved by 1.75 times within 2 months of implementation of the scheme.

2. Self organized improvements took place

3. Real time communication increased between employees

4. Quality improved and sustained.

5. The improvements were self-sustaining without any other capital investment.

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Tags: Business, Case study, Complexity, dynamics, Employee Relations, Employment, Human resources, Incentive, Incentive program, Management, Motivation and Rewards, Self Organizing

Source: http://rgbwaves.wordpress.com/2013/01/07/how-to-create-an-incentive-scheme-to-boost-self-organized-productivity/

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