We’ve all heard the metaphor about the carrot and the stick: Which works best to motivate the donkey pulling the cart, a carrot hanging from a stick, perpetually dangled in front of the donkey’s nose, or the stick applied firmly to its backside?

Many would take the position that the encouragement offered by the carrot is better than the punishment offered by the stick. With no offense intended toward donkeys, the same cannot be said of humans.

The carrot is an encouragement, but a promise for reward that never becomes reality soon becomes a disincentive.

In business, carrots can take many forms: a bonus for performance; a raise if certain metrics are achieved; profit sharing for employees; a day off with pay if goals are hit. But regardless of the mechanism, if the promise of a reward is never followed by the receiving of the award, the incentive will become a disincentive.

Goal setting is a science, and associating a reward with those goals is an art.

The topic of goal setting is a conversation unto itself, so let's instead focus on tips for tying rewards to those goals.

  • The significance of the reward should be tied to the significance of the influence in achieving the goal. If the employee has complete control over goal attainment, then a larger reward may make sense. If a person has very little influence on whether the goal is achieved, a smaller reward is in order.
  • The significance of the reward should be tied to the significance of the goal. Hitting the annual sales goal is more significant than keeping the break room clean, thus the rewards for achievement should not be the same.
  • Special compensation should be the result of special performance. It doesn’t really make sense to give someone extra compensation for just doing the job they normally do.
  • The person offered the reward should be able to track goal attainment. For instance, if an employee is offered a bonus for hitting an annual sales goal, but they have no information telling how they are doing until the year is over, there is no opportunity for behavior modification that may result in goal attainment. It would be like driving a car without being able to see out the windshield.
  • Once the results are known, the reward should be paid right away, or in the case of a missed target, the news should be conveyed quickly along with any backup information.
  • For a given employee, if the reward is not achieved over and over and over again, something is wrong. The problem could be with the goals, the rewards, or the employee. In any case, corrective action is in order.

Performance rewards can be and should be a win/win situation; the company’s performance improves as the employee’s paycheck increases.

Dave Bartholomew is retired after a career as a business adviser to leaders around the world. He and his wife Nancy also owned Simply Living Farm, a retailer of goods for a sustainable life. Prior to that he was CEO of several manufacturing companies in the outdoor recreation industry. He has authored three books, written numerous regular columns and taught at many universities. He can be reached at dave@ascentadvising.com.