You can change your organization with the right incentive structure. It might affect everything from how motivated your employees feel to the kind of company culture you build. In this section, I’ll tell you about the differences between top-down and bottom-up approaches – and why they make a difference in the modern workplace. Once you get a handle on these strategies, you’ll be able to make better decisions as a leader about driving performance at every level.
Finding the best strategy for your organization counts. Picking the right incentive structure could mean the difference between having a hard time getting people to comply and unleashing your team’s full potential. Let’s get started and study this more! The way that you structure incentives plays a giant role in shaping how your organization works and grows over time.
With top-down incentives you create alignment by having leadership set the direction. Bottom-up approaches tap into the creativity and firsthand knowledge of your employees.
Choosing one strategy over the other affects how involved your employees are and how much room there is for innovation. It also affects how fast decisions get made and how successfully plans get put into action. Businesses find that a combination of approaches delivers the best results. That way, you get the benefits of input from the top plus plans from the ground level.
The Features Of Top-Down Approach
When an organization’s senior leadership team determines goals, defines success metrics, and designs the plan, they follow what’s known as a top-down incentive strategy. Leaders set the targets everyone should shoot for, choose how to measure progress, and set up an organizational framework to guide employees. This guarantees that leadership has a clear vision for the company’s direction and helps everyone work toward the same big goals. Under a top-down system, executives develop the primary strategy, which is then executed throughout the organization. They choose which achievements merit rewards, decide how those rewards are allocated, and teams and people work within these guidelines to achieve the specified goals.
This usually works in bigger organizations that need steady standards across locations. Just to give you an example, retail chains may use top-down incentives to give you uniform customer experiences, while manufacturing businesses might set up company-wide production targets. These universal benchmarks make looking at performance at different sites easier.
Senior leaders often favor top-down incentives because they allow for careful control of company resources. Incentive budgets can be adjusted based on quarterly performance or changes in company goals, which also makes it easier for financial planning as managers have a clear budget for bonuses and commissions.
But possible challenges are out there. Top-down incentives may forget local market conditions or the obstacles teams face. Just to give you an example, sales personnel in urban settings could see different circumstances than those in rural areas.
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Uniform goals may create an uneven playing field in these cases. Keeping employees involved can be tougher if staff feel their feedback isn’t considered. When incentives are imposed without adding employee perspectives, there’s a danger that people may become disengaged and basically do the basic requirements instead of working to be great.
A big part of making top-down incentives is keeping senior leadership aware of day-to-day realities. When leadership understands the operational challenges at the frontline level, they can set more accurate targets and give rewards that drive performance. Regular on-site visits and open feedback channels help line up organizational goals with the experiences and plans of employees across the company.
The Features Of Bottom-Up Approach
Your frontline workers know your business better than anyone, and they see the struggles and inefficiencies that managers might miss completely. That’s why bottom-up incentives are cool. Staff members feel more ownership when they help create the incentives. They’re more motivated because they’re working toward goals that they helped set up in the first place. After all, people naturally care about their own ideas.
Look at businesses like HCL Technologies – they’ve seen some good results by taking an employee-first strategy. When they let their service teams design their own performance metrics, their customer satisfaction went up. And of course, happy customers usually spend more money, so the financial results followed, too. Some leaders might resist bottom-up systems because they’re afraid of losing control or authority. They might imagine everything descending into chaos if everyone starts making decisions.
But these problems like to be unfounded as long as you have the right frameworks in place. The big thing is to make sure everyone stays lined up with the company goals. Bottom-up doesn’t mean there’s no direction at all. It means you’re creating channels for ideas to flow upward. Regular review meetings help everyone stay connected to the bigger picture.
Communication can be a challenge with this model, though; if there aren’t clear goals, teams might start feeling overwhelmed by the options. You need information to flow efficiently between departments so silos don’t form. For example, the factory workers at Toyota famously improved assembly line processes through bottom-up suggestions. Their Kaizen system captured small improvements that added up to some big efficiency gains. Workers were able to find problems invisible to managers who didn’t visit the factory floor.
The positive news is that technology makes it quite a bit easier for bottom-up systems recently. With online places you can get feedback from hundreds of employees at once. You can track goal progress transparently across different departments. People can share their ideas without having to wait for scheduled meetings. The best bottom-up incentives tap into people’s intrinsic motivation.
They create opportunities for growth and learning as part of regular job duties. Social recognition programs can improve these effects by celebrating contributions in a visible way!
Real-World Examples
You want to make sure your employee incentive programs motivate your team. There are a few different ways businesses can go about it and the strategy you pick can have a big effect on outcomes.
Take Zappos, which has a great strategy that starts at the top. When they bring on new hires, they give them money to quit if their heart’s not in it. It makes sense – only people who start are the ones excited to be there. The goal is to build a committed team from day one. HP does something cool, too. They reward employees who spend time volunteering in their community. If you clock at least 10 hours of service per quarter, you can get benefits like donations to a charity and discounts. You can even earn bonus vacation days. They also host virtual events like dance parties and cooking classes to lift everyone’s spirits.
Some businesses take another approach and let motivation bubble up from the bottom. Bain and Company is all about giving their employees the freedom to work how they work best. You can set up shop in different places, and they tell you about projects that get your gears turning. Knocking it out of the park can even earn you some extra paid time off. Not too shabby!
Unilever is another company that’s shaking things up. They realized that a one-size-fits-all reward system wasn’t cutting it, so they started customizing incentives for each employee. They look at things like your personal habits, what makes you tick, and even your cultural background. Then they might give you a bonus, some time off, or a shoutout in front of the whole team – whatever floats your boat. These programs work. One exec shared that after they rolled out a new incentive plan, employee recognition skyrocketed, and it improved their bottom line almost immediately. People were fired up and ready to give it their all.
Southwest Airlines is big on peer recognition, too. They have this thing called the SWAG program, where you can give props to your coworkers for living out the company values. Getting recognized racks up points that you can cash in for rewards that mean something to you. It creates a positive culture where everyone is lifting each other up. Then there’s Google, which is kind of doing its own thing with its “20% time” rule. Basically, one day a week, you get to ditch your regular to-do list and work on any project that inspires you. It can give you some space to learn and lets you take the reins on what you want to dig into. Fun fact – some of Google’s coolest inventions started as 20% time experiments!
Finally Amazon has an interesting setup with their restricted stock awards. When they give you shares, you have to wait a while before you can actually cash them out. The idea is that it ties your own success to the company’s long-term performance. You’re invested in helping the company to grow and grow for years to come.
Put It Into Action
You want to strike a good balance between top-down directives and bottom-up input when you’re putting together an incentive system for your company. It takes some careful planning and regular maintenance to get it right. If you lean too far in either direction, you might end up with employees who aren’t that motivated or who aren’t working toward the same goals as the company. The downside is that employees might feel a bit disconnected from the process if they don’t get to have any say in it.
The leadership team is the one setting the direction when handling top-down incentives. They find the real metrics and reward structures based on what the company is trying to achieve. This means everyone has a clear idea of what they should be focusing on.
On the other end, bottom-up incentives bring in feedback from people at all levels of the company. Team members get to help find the metrics that make sense for the roles they’re in. This usually gives them more bought-in and a sense of ownership over the results. I should also point out that regular check-ins help everyone stay on track. That way you can make adjustments if incentives aren’t giving you the results you were hoping for.
From what I’ve seen, businesses that knock it out of the park with their incentive systems use a combination of approaches. The leadership team sets the framework while teams weigh in on execution. No matter what kind of incentive system you go with, communication always plays a big part. Leaders need to be very clear about the “why” behind the performance metrics they use. Teams need to know how their work fits into the bigger goals of the company. Transparent conversations about what’s expected help go a long way in preventing confusion and frustration down the line.
One thing to watch out for when designing incentives is unintended consequences. Let’s say you’re only rewarding sales numbers. That might end up hurting customer satisfaction in the long run. Or if you focus too much on speed, the quality of the work could start to suffer. The best systems take into account different things that all give you sustainable success.
Feedback loops are another part of the equation and give businesses a chance to smooth out their strategy over time. Creating quarterly reviews and employee surveys helps you find what works well and gain insights into what motivates your teams. Making small adjustments along the way can stop small problems from snowballing into serious issues. At the end of the day, the best incentive systems evolve with the company. As your industry and company culture change, you might need to come up with new metrics and targets.
Alternatives And Hybrid Options
You don’t have to choose between a top-down or bottom-up strategy with these incentive structures. Businesses are finding success with hybrid models that combine elements of both. One of the most popular models is called “middle-out.” In this setup, the middle managers are the drivers of change. They take the big-picture goals from the higher-ups and turn them into real actions for the teams on the ground. They also pass feedback and ideas from the frontline staff back up the chain. It’s a good way to get everyone on the same page and working together.
Another idea is holacracy – it organizes employees into circles that manage themselves. Each team gets to make their own decisions about how to handle their tasks. But there’s still enough structure to keep the company moving in the right direction. It’s a great compromise for execs who want control and employees who want independence.
OKRs (Objectives and Key Results) are popular with tech businesses recently, too. The big wigs set the serious goals for the business. Then each team figures out how they’ll measure their own success and what steps they need to take. Everyone stays focused on the same targets but teams have the freedom to tap into their own expertise.
Hybrid models aren’t always the answer, of course. Some projects need a firm guiding hand from leadership. Others do best when innovation bubbles up from the grassroots level. The trick is to find a strategy that’s a good fit for you and your business. Lots of thriving businesses mix up their incentive strategies based on the project or department.
Teams dip their toes into bottom-up planning within traditional top-down structures. A manufacturing company might let production crews recommend improvements while serious decisions stay with management. A marketing department could invite customers to help shape campaigns, even though execs are steering the brand. Finding the right balance takes some trial and error. Organizations can start small by testing out hybrid setups in departments that are open to it. Maybe teams can allocate part of their budget or time to self-directed projects. When those experiments pay off, the hybrid strategy can spread naturally to other parts of the company.
Level Up Your Incentives and Rewards
The way we work is changing fast. That means the way businesses motivate their employees needs to change, too. If you’re in charge of keeping your team happy and productive, you might have seen that the old methods don’t always work well. This is especially true when everyone isn’t in the same place. It can be tough to make sure that remote workers feel just as included as the people who come into the office every day.
Another big change is the move towards flexible ways of working – and a bigger emphasis on employee wellbeing. Some of the most innovative businesses out there are letting their staff have more of a say in picking benefits that matter to them. The goal is to create a more personalized experience. The thing seems to be finding the sweet spot between leadership giving clear direction and letting team members have their voices heard. Employees feel more motivated in their jobs when given rewards that are real to them personally.
Of course, these changes in the workplace bring fun options and some hurdles to overcome. Businesses have to put thought into how to keep things fair between remote and in-office staff. They also need to build a strong team spirit when people are in different locations. The approaches that hit the mark will probably combine the best bits of top-down input and bottom-up involvement – all customized to fit each company’s culture and aims. Different motivation strategies at workplaces usually come with benefits and challenges that vary for each environment.
Our specialty at Level 6 is putting together incentive programs that work. We’re all about helping you take your business to the next level with a number of incentive plans. If you want to get your sales team firing on all cylinders or improve morale and happiness, we might be able to help. We offer branded debit cards, employee rewards programs, and sales incentive programs that are customized just for you.
We’ll help you get the results you’re after. Our main focus is on creating custom programs that move the needle. Get in touch with us for a free demo. See for yourself how we help high-performing businesses get the most bang for their dollar and smash their sales targets!
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
