How Do Incentives That Reward Innovation & Creativity Affect a Company's Bottom Line?

Improve the bottom line by encouraging employees to innovate.

Employees who work in drone-like fashion are not likely to feel motivated to help their companies find solutions to problems that may be hindering profits. On the other hand, employees who are empowered to express their creativity and think outside the box are more likely to feel compelled to help their companies increase profitability. By providing incentives that reward innovation and creativity, you can create a workforce that is committed to improving your bottom line.

Role of Incentives

Innovations can result in streamlined processes, new ways to produce goods or services more cheaply, or improved quality of existing goods or services sold by a company. All of these scenarios result in a single outcome: a healthier, more profitable bottom line. However, such innovations do not happen on their own. Behind such innovations are employees thinking creatively. To get employees thinking creatively and coming up with innovations, companies must provide incentives

Sample Incentives

The most obvious incentive is cash. Employees who know that their creative innovations will be rewarded with cold, hard cash have something concrete to work for. However, there are other types of incentives too. They can include the opportunity to move up the career ladder, take part in more rewarding projects and take on challenging new responsibilities. Simple recognition can also be a powerful motivator, since people naturally want to be distinguished from their peers.

Setting the Tone

Companies that want employees to engage in creative problem solving need to give their employees explicit permission to engage in creative thought. They should also create a sense of ownership among workers, so that workers feel that their own interests are closely aligned to the company's. When their goals and the company's goals mesh, employees are more likely to put real thought into innovations that will improve the bottom line. Lastly, there must be an atmosphere of permissiveness, in which employees know that they are free to share ideas about potential innovations, and in which they can experiment to see if their ideas have real merit.

Assessing Efforts

The only real way to know whether incentivizing creativity and innovation are actually impacting a company's bottom line is to assess the situation. There are several things you should look at, the first of which involves the inputs, or what the company is investing to foster innovation. Then look at what processes exist for allowing employees to innovate. Finally, measure the output. What innovations have resulted, and what has been the impact on profits? A thorough assessment will help you directly link your efforts to incentivize creativity and innovation to improvements in the bottom line.

References

• Innovation Tools: Seven Strategies for Sustained Innovation; Robert Kalsberg and Jane Adler, 2005
• Canadian Management Centre: Enterprise-Wide Innovation May Give Firms an Important, Hard-to-Duplicate Competitive Edge
• IT Business Edge: Measuring Innovation's Impact to the Bottom Line; Ann All, 2007
• The Work Foundation: Harnessing Creativity and Innovation