Recognizing and Rewarding Innovation

You need to consider your reward programs carefully before you launch idea campaigns or other innovation initiatives. You need to consider what kind of behavior and which kind of results that should be rewarded and you need to consider how to reward this.

I believe most companies really long for an organization full of self-motivated employees that see innovation as a natural part of the business and their work. For this to happen, I believe recognition is a much better tool than financial rewards.

Such recognition should be made as public as possible and it should involve a high-ranking executive if relevant and possible. Recognition can also be accompanied by small gifts such as a dinner for two (it pays to remember the spouse of a hard working employee). Enough to matter but not so much that it over-shadows the recognition given.

Like this, the employees get a pat on the shoulder and they can better explain to colleagues, family and friends what they do and that their work is valued by the company. Such recognition should of course also enhance the prospects of a promotion. For the company, this is a great chance to promote innovation within the company. Nevertheless, I am amazed how often companies do not execute on such opportunities.

Why is recognition so important? I remember a conversation I had with Google employees a few years back. I asked them what actually drives people at Google and they replied: First of all, there are very few places where you get the chance to really make a difference and see your work being used by millions of people. The other thing is that Google has some of the brightest employees in the world. It feels great to impress such colleagues. That drives us.

If employees at what is considered one of the most innovative companies in the world are driven by impressing each other, I think this goes in other innovative organizations as well. And with such a driver, recognition can help create innovative behaviors and results.

On rewarding and recognizing innovation, there are a couple of things that we should be aware of:

Participation versus contribution. Getting people engaged in innovation initiatives – especially idea generation campaigns – can be a challenge in some companies. Then you might have to focus on recognizing and rewarding just for participation. But in the long run, recognition and rewards should be given to those who really contribute towards the desired outcomes.

Internal versus external recognition. As companies go outside the corporate boundaries to innovate, they have to deal with issues on how to reward and recognize external contributors. This is something that will get a lot of attention in the coming years.

If we look beyond private people contributing to initiatives such as Dell IdeaStorm and MyStarbucksIdea, then we have professional contributors in the form of employees at partner-companies and individuals who contribute either directly or through intermediaries such as InnoCentive.

Recognition definitely still plays a role here, but the challenge is that external contributors do not stand to gain much from corporate recognition. It becomes more of a question on how to make the contributors look good in the larger ecosystem. This is difficult and thus financial rewards might be more relevant here.

Big rewards versus small rewards. Innovation is team-work and if companies begin to offer big financial rewards on an individual basis they could set people up against each other. Be careful about turning colleagues into rivals.

As I said first, I believe recognition is a better tool than financial rewards. It would be great to hear your take on how to recognize and reward innovation.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.