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AAA incentives

Posted by Mark Thompson

Mark Thompson

Well, it’s that time of year again when exams are in season and I don’t doubt that the question you are asking yourself is this: should I pay my kids for exam success?

As someone who makes a living out of designing incentive schemes, among other things, I naturally assumed the answer to be yes. Back in 1979, when my A-level results were pinned up on the school notice board with results against my name, my Dad gave me, out of the blue, a cheque. I bought a pair of the best hi fi speakers money could buy at the time and they are still going strong (I’m listening to them now!) and so this recognition of my achievement is still giving me pleasure today. My Dad was an architect, not a reward consultant, and so his method was crude: a bonus, not an incentive. For my own children, I decided to move to the next level of sophistication in variable pay design by linking a monetary payment to the achievement of each grade. This is a pure incentive deal – ‘if you do x, you get y.’ For anything below a C, of course, the ‘payment’ becomes negative, so there’s a subtle use of the stick as well as the carrot.

This scheme was announced with due ceremony to my eldest son in the run up to his GCSEs. If we were expecting a sudden turbo-charged boost to his revision routine, however, we were sadly disappointed. Said son continued on his merry way, performing much in line with expectations.

Any evaluation of this incentive scheme as a motivator would find it somewhat wanting and so perhaps we should have scrapped the idea. Having done it for Son No 1, however, we felt duty-bound to offer the same deal to Son No 2. This is one of the problems with incentives: once you’ve let them out of the bag, it’s very difficult to put them back. And it’s not easy to vary the terms because you’ve set a precedent. Son No 2’s predicted grades were a great deal higher than those for Son No 1 but if we had raised the bar on the incentive payment terms he would have regarded this as discrimination against him. Whilst Son No 2 also performed in line with expectations, we therefore paid him a great deal more than we had paid Son No 1. In Son No 2’s view, this was only fair, but I can’t help thinking that setting targets that are stretching (though achievable) is an important part of incentive design, so perhaps targets should be adjusted for each individual to take account of their expected performance.

Now we come to Son No 3 whose preparations for GCSEs start next month. The incentive scheme is still in place – because, as No 3 would see it, it would be wholly unfair if it wasn’t. We have an innovation this time – a double incentive for French which is his weakest subject. There’s certainly been a marked increase in the time Son No 3 spends on French, but this is down more to the fact that we have got him a personal tutor with whom he has to sit and study than a result of the incentive plan. When I told him I was writing a blog about his exam incentive he revealed that he’d forgotten about it.

All the thorny problems of incentives plans are therefore revealed in the simple case of the Three Sons:

  • Is there an exit strategy? Making it plain that the incentive is for one year only, or discretionary is always a good idea (unlikely to work for siblings unfortunately.)
  • How are targets set? Setting targets which are stretching but achievable is always going to be difficult. A key question, though, is to be clear what you are trying to do – focus on performance improvement or rewarding the best.
  • Communication: you can’t communicate enough. Sticking the incentive terms on the fridge door or on Son No 3’s screen saver on his PC would have been a good idea.

Thinking it through, I’m beginning to realise that my Dad may have had the right idea after all and a post-results bonus to recognise achievement and show that he really cared about it was the best approach. But what do you think? Should parents use money as an incentive to do the best they can in GCSEs and A-Levels? Or should they pay a bonus? Have you got some tips for how to make this work? Or is it better to keep money out of it? After all, money doesn’t talk, it swears, as Mr Dylan would sing and if getting good grades isn’t a big enough incentive, then what difference will cash make?

 

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2 comments

  1. Arun

    Arun

    May 3, 2015 at 7:19 am

    An interesting perspective indeed. I would’ve actually done it a little differently by first understanding the expectations or aspirations of my sons to establish what is of the most value to each one of them. As you rightly said, money itself might not be a great motivator. But it certainly becomes one when you attach it to something that might mean much more than just money. Maybe a trip to Paris, or a new guitar, or tickets to a football match, or a new gadget.

    Also, I think the incentives work much better if they are monitored and managed on a regular basis, rather than just providing one-time gain.

    And if an organisation is unable to do this, then it might as well give out a bonus, which is relatively simpler to administer and has been a tried and tested tool for decades.

  2. LAOH

    LAOH

    May 4, 2015 at 3:03 pm

    Interesting approach, Mark, and I did have a thought on why you may have not seen the success you imagined. Well, I didn’t have the thought…some smarter folks did. i’m simply a connector! Search on youtube for an entertaining and informative cartoon/video Drive:The Surprising Truth About What Motivates Us, by Daniel Pink, based on his book. It explains how in a task requiring intelligent thought, pay for performance is actually detrimental. And it offers some rationale, which you may be able to apply to Son #3, even at this stage. Best of luck to him, anyway!

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