The economy of incentives
Management is all about developing the right incentives and is critical in determining outcomes.
In many social sector assignments, it has been seen that projects are very well conceptualised. However, it is the implementation and especially the management of the project that lets it down.
Interestingly enough, management failure here does not refer to a weak field plan, monitoring and staff issues, timeline, scope of work, limited funds or even talent, but rather a weak incentive plan.
Consider a hypothetical project focused on ‘increasing women skills and sources of livelihood’. Assume the project is conceptualised in Karachi and implemented in five districts in Sindh and Punjab. Each province has a provincial office and subsequent district offices in each of the implementation areas with their respective field, finance and administration teams.
With respect to the hypothetical project, incentives need to be built into the implementation plan and must be reflected at all tiers of operation – not just developed and customised with respect to ensuring high performance of provincial managers, or with respect to women and their motivation for skill development, but also for district managers, field staff, administration team and for women to find avenues to continue improving their skills and turn them into livelihoods.
Without this rooted desire, the project will become a mere activity and will not achieve the aspired outcome at each stage of work.
Here it is important to underline that incentives need to be clearly communicated and are not always monetary in nature, but could also be psychological, social or even intellectual. Examples of such could be as basic as appreciation, personal development, a step towards an individual goal or a long-term objective. The manager needs to identify that driving factor and localise accordingly.
The model based on incentives builds empathy and ownership on different tiers of operation, with a focus on generating value and ensuring achievement of desired results – which in the case of the above project is an increase in household income.
Most importantly, incentives will help standardise and sustain inter-provincial performance, as individual motivations will be addressed and aligned to outcomes. Similarly, ownership is important because even the most well planned assignments evolve during field work.
Therefore, if the goal remains achieving the desired targets instead of following predefined processes, the field staff will feel the need to respond rather than let things drift, as would be the case if a person is focused on activity rather than result.
Incentives drive motivation, which determines performance and is not always present in monetary terms. Being employed or delegated to execute a specific task is not always good enough to ensure high quality output. It is self desire, willingness and the personal drive to achieve excellence built on the base of an incentive, which secures results.
In the corporate sector, money is the general form of incentive and is easier to quantify, monitor and even provide, as value generated through money determines performance.
In the case of development sector projects, value is not measured through the money it generates, but is focused on output at each stage which is not always easy to quantify in direct monetary terms, not immediately anyway. Therefore, incorporation of appropriate incentives is critical to determine achievement of desired results.
It is important that incentives are customised to each circumstance or designated responsibility, some in the form of a group while others on an individual basis. Moreover, effective incentives continuously evolve and change.
The focus needs to be on managing and monitoring these, rather than a blanket evaluation on strategy and outcomes. This is because in most instances, the analysis and appropriate fix of incentives would determine the fate of the project.
Incentive management is necessary to encourage a bottom-up approach to operations, which is crucial for success as it is suspected that an alternative top-bottom approach (with even the best of monitoring plans) would not only have greater cost implications, but will leave loopholes and would desire room for improvement.
In an ideal world, the top-down approach of monitoring-based management will be merged with the bottom-up approach of incentive-based management.
Published in The Express Tribune, December 20th, 2010.
Interestingly enough, management failure here does not refer to a weak field plan, monitoring and staff issues, timeline, scope of work, limited funds or even talent, but rather a weak incentive plan.
Consider a hypothetical project focused on ‘increasing women skills and sources of livelihood’. Assume the project is conceptualised in Karachi and implemented in five districts in Sindh and Punjab. Each province has a provincial office and subsequent district offices in each of the implementation areas with their respective field, finance and administration teams.
With respect to the hypothetical project, incentives need to be built into the implementation plan and must be reflected at all tiers of operation – not just developed and customised with respect to ensuring high performance of provincial managers, or with respect to women and their motivation for skill development, but also for district managers, field staff, administration team and for women to find avenues to continue improving their skills and turn them into livelihoods.
Without this rooted desire, the project will become a mere activity and will not achieve the aspired outcome at each stage of work.
Here it is important to underline that incentives need to be clearly communicated and are not always monetary in nature, but could also be psychological, social or even intellectual. Examples of such could be as basic as appreciation, personal development, a step towards an individual goal or a long-term objective. The manager needs to identify that driving factor and localise accordingly.
The model based on incentives builds empathy and ownership on different tiers of operation, with a focus on generating value and ensuring achievement of desired results – which in the case of the above project is an increase in household income.
Most importantly, incentives will help standardise and sustain inter-provincial performance, as individual motivations will be addressed and aligned to outcomes. Similarly, ownership is important because even the most well planned assignments evolve during field work.
Therefore, if the goal remains achieving the desired targets instead of following predefined processes, the field staff will feel the need to respond rather than let things drift, as would be the case if a person is focused on activity rather than result.
Incentives drive motivation, which determines performance and is not always present in monetary terms. Being employed or delegated to execute a specific task is not always good enough to ensure high quality output. It is self desire, willingness and the personal drive to achieve excellence built on the base of an incentive, which secures results.
In the corporate sector, money is the general form of incentive and is easier to quantify, monitor and even provide, as value generated through money determines performance.
In the case of development sector projects, value is not measured through the money it generates, but is focused on output at each stage which is not always easy to quantify in direct monetary terms, not immediately anyway. Therefore, incorporation of appropriate incentives is critical to determine achievement of desired results.
It is important that incentives are customised to each circumstance or designated responsibility, some in the form of a group while others on an individual basis. Moreover, effective incentives continuously evolve and change.
The focus needs to be on managing and monitoring these, rather than a blanket evaluation on strategy and outcomes. This is because in most instances, the analysis and appropriate fix of incentives would determine the fate of the project.
Incentive management is necessary to encourage a bottom-up approach to operations, which is crucial for success as it is suspected that an alternative top-bottom approach (with even the best of monitoring plans) would not only have greater cost implications, but will leave loopholes and would desire room for improvement.
In an ideal world, the top-down approach of monitoring-based management will be merged with the bottom-up approach of incentive-based management.
Published in The Express Tribune, December 20th, 2010.