New Ways of Setting Rewards: The Beyond Budgeting Model
Monetary compensation for performance has been seen in the past as the ideal way to motivate employees within a company. This was based solely on setting up goals and rewarding those who achieved them. Typically the higher up the organizational chart you sat, the larger the bonus. This study found that “Individual Performance” measures discouraged teamwork, created a finger pointing work environment, and/or incentives were not fairly disbursed throughout the organization.
The article explains how to avoid traditional budgeting and adapt a more flexible type of planning process. The planning process has been taken down to the bottom level of the food chain, so to speak. The employees who are directly involved with the products and services being passed on to the consumer are involved with establishing the goals and policies which lead to incentives within their department/branch. Several incentive models that have been successfully implemented in companies, specifically: Groupe Bull & Handelsbanken, are reviewed. Interesting enough, not all rewards are monetary.
One of the most important concepts in my opinion was the idea that money doesn’t motivate employees. Involvement does. By allowing the employees who are striving to reach a target actually be involved in determining what that target is, management is empowering those people. This is going to make them feel more valuable to the company. It is going to create an atmosphere where people are going to work together to reach a common point. If that goal is achieved, everyone is rewarded equally. If that goal is not met, there is not a blame placed on one person or a group of individuals, the whole team is held accountable. If the management style chooses to create this “team” environment, at that point of not achieving the goal, the team will need to work together to determine what performance hindered their efforts. Then establish...
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