Having employees that innovate is optimal. But how do incentives play into the likelihood of employee innovation?
According to research published this year in Human Resource Management Journal, individual bonuses are not the way to go. Instead, team incentives, profit-sharing plans or indirect pay are best.
Researchers, who performed the study in Canada, looked at government data from 3,000 workplaces, comparing incentives to whether firms had created improved products or processes or had created new products in their market. Companies with team-based or indirect incentives for innovation tended to have more creativity in products and ideas than those that offered individual incentives.
According to coverage of the study from Forbes, there is data going back to the early 1960s to support the idea that giving bonuses to individuals for creative or innovative work is less likely to result in new ideas and innovation.
"People tend to innovate when they feel more secure," study co-author Bruce Curran, a PhD student at the University of Toronto, to The Wall Street Journal.
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