While catching up on reading one of my favorite blogs the other day, I came across a thought provoking article, “How to Kill Innovation: By Rewarding It?”. The author, Ann Bares, sorts through the hullabaloo around the topic of rewarding innovation and discusses whether organizations can foster a culture of employee innovation through the strategic use of rewards.
One school of thought, according to Bares is, “Rewarding innovation doesn’t kill creativity- ‘the right configuration of rewards, not an absence of them’ and leadership fosters innovation.” She explains that rewards have to be structured such that leaders can protect and nurture innovative employees in both the short and long term.
The opposition to fostering an innovative culture with rewards, as reported by Bares, believes that large investments in innovation tend to have the effect of creating an atmosphere where risk and innovation are actually stifled instead of nurtured.
I help administer a handful of reward programs specifically designed to encourage employees to submit ideas for creating new products, making the workplace environmentally friendly and other innovations that reduce costs. There are two reasons that these reward programs are successful: one is that management carefully considers and values ideas submitted by employees and the other reason is that they are willing to accept the risk of implementing an idea that may not pan out.
These innovation reward programs are structured so that employees receive award points when an idea is submitted and when an idea results in annual cost savings. Depending on the level of savings accrued over a calendar year, the employee can earn a different amount of award points. Workers can spend the points right away on merchandise awards or bank their award points to use on a higher-priced merchandise award level later on.
Andrew S. Winston sums up the argument for rewarding innovation quite well in his article on driving employee innovation, “Generating excitement around new ways of doing business, finding ways to use less energy and materials, and creating products and services that help customers reduce their environmental impacts will drive long-term profitability. It's just good strategy.”