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The Danger of Entitlement and Incentives March 10, 2009

Posted by Darth Sidious in Managing Employees.
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One of the problems with salary increases, bonuses, and other incentives (ESPP, stock options, etc…) is that they quickly become viewed as entitlements. The first or second time you try it, you get a boost of appreciation as it’s unexpected, but from then on it’s just merely expected in return for existing levels of performance.

So what’s a Sith Lord to do? Well for starters be careful how often you use it – reduced and unexpected frequencies help, and the moment it becomes expected stop before employees become dependent on it (I’ve seen people base their personal finances on anticipated bonuses, ESPP, and stock options).

Also, try to rotate between incentives so that it doesn’t become the expected, routine, and periodic quarterly bonus check. But rather incentives targetted towards rewarding something specific (e.g. a thanks for completing Death Star #23 ahead of time and under budget).

You can be successful at periodic incentives, just make sure they reward very specific achievements (preferrably goals and expectations that were communicated early on). You don’t want employees to feel they’re getting it out of entitlement (e.g. for merely existing for a period of time), but because they completed and outstanding job on a certain task (and if they want another one, they’ll need to repeat the outstanding performance – because it’s not going to happen with status quo).

Darth Sidious

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