Feature Article - January/February 2019

The Impact of Incentives on Organizational Change

Rewards & Recognition Help Smooth Transitions

By Brian Summerfield

The great business management thinker Peter Drucker is credited with saying, "Culture eats strategy for breakfast." While there's some debate over whether he actually said that, that phrase has still become something of a mantra in the business world. That's because it perfectly captures the essence of a big challenge for organizations: change.

The Drucker quote identifies the major obstacle to any changes in the strategic direction of a company—that is, its current culture and the people who comprise it. Employees are used to a certain way of doing things. They know who they're working with, what tasks they're responsible for and what they can expect, and they probably perform well within that setting.

From the employees' perspective, any significant changes threaten to upend all that, meaning they'll potentially spend the next few months (or perhaps years) getting back to the comfortable state they're currently in. Even when changes are rolled out thoughtfully, some of them will passively or actively resist those. If they aren't rolled out thoughtfully, it could lead to something much worse.

Organizations can change, of course. They do it all the time. And there are several approaches companies can take to drive those changes more effectively. Establishing clear priorities is one. Piloting new programs is another. And interestingly, a recent article from the Harvard Business Review ("Research: To Get People to Embrace Change, Emphasize What Will Stay the Same," Aug. 15, 2018) said that emphasizing continuity—and particularly how the critical elements of the company will remain the same during and after the change—is a very effective way of getting employees to accept that change. To put it another way, it's the tribute that strategy pays to culture.

As incentives practitioners know, rewards and recognition are another tool in the toolkit for getting employees to buy into organizational changes. They're the "dangling carrot" that can provide employees with some extra motivation to try new things they're uncertain about. It shouldn't come as any surprise that people will generally put in more effort if they have a chance to win a new purse, golf club, television or high-end cookware, as well as be recognized for going the extra mile.

That said, rewards and recognition must be applied conscientiously when it comes to change. It isn't enough to just assume one kind of program or prize will work as well as the next. To find out how to use incentives to help drive change, keep reading.

Aligning to the Change

Organizations undergo many different kinds of change. Some are intentional, others are not. (For the purposes of this article, we're more interested in the former category.) These changes can include everything from planned software upgrades and updates to shifts in corporate culture. But the one common thread all of them share is that they require some shift in human behavior, said Ric Neeley, director of marketing at Hinda Incentives.

"If you're managing a rewards and recognition program and

Rewards and recognition must be applied conscientiously when it comes to change.

you hear about a new organizational initiative or change that's about to take place, that's a great time for you to start thinking about how you can help support that organizational initiative by putting together an approach to reward and recognize the people who are embracing those organizational changes," he said. "You're certainly going to want to get more people committed to your initiatives to drive those changes, especially if it's going to have an impact on finances."

As soon as you hear about an impending change, you should start thinking about that financial impact, he added. This includes both the money coming out of your budget to fund any new initiatives, as well as the potential positive effects of your program on the organization's bottom line. Being able to make a case for the latter will help build support for your program.

You should also be thinking about how to align your rewards and recognition ideas to the organization's strategy, said Susan Schierenbeck, director of plant solutions for Hinda Incentives and a Certified Recognition Professional (CRP). That means focusing on the ideal result of the change, then reverse-engineering the program to fit that.

"Any incentive is designed to drive desired outcomes," she explained. "The rules structure, the rewards system—all of it is based on what we're trying to do within the organization. If you pull back from that and think about recognition a little more holistically, recognition as a strategy—and not necessarily a program—needs to align to business objectives. Incentives programs will help organizational change initiatives succeed when recognition is aligned to reinforce them.