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Amazing Business Radio: Sam Stern

Five Myths About Monetary Incentives

Why Giving Monetary Incentives is a Bad Idea

Shep Hyken sits down with Sam Stern. They discussed Sam’s research on why giving employees monetary incentives for providing good customer experiences is a bad idea.


Top Takeaways:

  • Two years of Sam’s research shows monetary incentives for providing good customer experiences distracts your employees from improving their experience delivery. Instead, they focus on themselves instead of the customer.
  • Sam recommends moving incentives into your employees base pay. If you hire someone to deliver a good customer experience, it should be part of their job description and be reflected in their salary.
  • How a customer remembers an experience will be guided by two factors:
    1. The peak moment in that experience, whether it was good or bad.
    2. How the experience ended. If you end an experience with a long drawn out survey or an unauthentic pitch to leave a good review, that last experience will be the most salient in the customer’s mind.
  • Sam shared five myths about monetary customer experience incentives and why they’re a bad idea.
    1. Signal Myth: A monetary incentive for good CX doesn’t say, “We value great customer experience and our loyal customers above all else. It says, “We value it as much as everything else we have a monetary incentive for.”
    2. Control Myth: Companies create boring workplaces with too many rules and restrictions. They then blame employees for being bored and “lazy”.
    3. Effectiveness Myth: Even if money influences good behaviors, it’ll only work in the short term and for discreet tasks that rarely make a great customer experience.
    4. Motivation Myth: People love to make money, but they aren’t motivated by it beyond their needs being met. Making progress on important work, getting things done that matter, and connecting with peers matter is also important.
    5. Retooling Myth: Employees are creative and will always find a way to game any incentive system. You will constantly have to refine and update it to get rid of the bad behaviors the incentives create.

Quotes:

“Paying employees for delivering a good customer experience is a bad idea.” – Sam Stern

“Create an environment where people aren’t bored at work and you’ll never have a motivation problem.” – Sam Stern

“Trust employees and treat them like adults and they’ll do the right things for the right reasons, without you having to bribe them with financial incentives.” – Sam Stern

“Employees will have the right motivation if you create an environment where doing amazing work for the right reasons is something that’s appreciated, noticed, and respected.” – Sam Stern

About:

Sam Stern is a principal analyst at Forrester’s customer experience research practice. His research focuses on customer-centric culture, employee engagement, and deploying different research techniques to create better experiences. Sam is also the host of CX Cast, Forrester’s weekly customer experience podcast.

Shep Hyken is a customer service and experience expert, New York Times bestselling author, award-winning keynote speaker, and your host of Amazing Business Radio.

This episode of Amazing Business Radio with Shep Hyken answers the following questions … and more:

  1. Should you give employees monetary incentives?
  2. What causes employee boredom?
  3. How can you be memorable to your customers?
  4. How can you reduce friction and increase conversions?
  5. What motivates employees?
 

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