Start-ups have been warned to be wary of tying employee incentives to company projects in the wake of Google’s decision to tie 25% of staff bonuses to the success of its social strategy.
Kevin Dwyer is the director of HR consultancy Change Factory, says that employee bonuses often have little impact on staff motivation because, in most cases, it takes more than money to inspire employees to perform better.
“When people are reasonably well paid, employee bonuses don’t have a lot of impact. Empowering people, by giving them more authority and more challenging roles, motivates people more,” he says.
Dwyer’s comments come in light of recent news that Google’s new chief executive Larry Page has tied 25% of employee bonuses to the success of the company’s new social strategy.
If Google’s social strategy fails this year, employee bonuses will shrink by 25%. If it succeeds, employee bonuses will be 25% larger.
It’s believed the management changes will allow Google’s various business divisions to be more autonomous.
By tying bonuses to the company’s social efforts, it’s also hoped that employees will have an added incentive to help Google succeed at social networking, which hasn’t been a strength area for the company in the past.
The rule applies to all employees, not just those working directly on the company’s social projects like +1. Employees are reportedly encouraged to participate by promoting Google’s social products to family and friends.
“The idea is to empower people, let them take risks and give people more authority over decisions,” Google told reporters in the US.
A Google Australia spokesperson declined to comment on whether the incentive will apply to staff outside of the US, but it’s believed Page is determined to reignite innovation within the company.
HR expert Martin Nally says employee bonuses linked to company projects can work, providing the employees have a clear understanding of what is expected of them and what the expected outcomes are.
“If businesses can do that, I would endorse it 100%… If employees feel they are making a genuine contribution to the company, that’s when it can be awfully effective,” he says.
Google is well-known for its long list of employee incentives, including free onsite haircuts, fully-equipped gyms, games rooms, relaxation rooms and dry cleaning services.
Another famous benefit of working at Google is the “20% time” program, whereby Google employees use up to 20% of their working week to pursue special projects.
Dwyer says while these incentives are effective at fostering a positive and productive workplace, he has reservations about the individual nature of Google’s latest employee bonuses as there is little incentive to work as a team.
He says companies that offer bonuses also run the risk of setting a precedent, as employees often come to expect bonuses regardless of their performance.
However, he says small businesses can emulate some of the other incentives on offer at Google without breaking the bank.
“Having places where people can relax and think – that can easily be done in a small company,” he says.
“Brainstorming sessions are another easy one. You could have sessions every month, even if it’s just down the pub.”