For the last few years, behavioral psychologists like Daniel Kahneman, Dan Ariely, and Barry Schwartz have been advocating that rewarding an employee’s hard work is more important than rewarding based on results.
This Business Insider report has some more details.
Businesses exist because there is an outcome (bottom-line) and that outcome is a result of the combined efforts put in by the employees.
So, it seems fair to reward employees that generate more outcome or results compared to employees that generate lesser results.
Most companies today face tremendous competition from peers as well as new-comers (startups). In times of tough competition, it is important for a business to innovate and find creative ways to stay afloat or ahead.
To innovate there has to be experiments, many experiments fail before one succeeds. That successful experiment than becomes innovation.
For fruitful innovations to happen companies need to create a thriving culture for experimentation. Culture cannot be just words and emails, it has to penetrate to the core. Rewarding employees is part of that core.
Rewarding only those whose experiments have succeeded and not rewarding the many failed experiments (hard work), doesn’t create the required innovation culture.
An innovation culture has its heart in the experimental nature of its employees. Rewarding experiments and hard work even if they have failed is more important than just rewarding the ones that succeed.
Innovation and creativity are human skills no computer can take over.
Reward people with the bravery to explore the unknown, reward people taking a path without a map, and reward people with the courage to fail.