Alpha Comp

Living by Numbers in SPM

Friday, June 26th, 2009 | Non cash incentive, SPM, analytics | No Comments

An article in the July 2009 issue of Wired magazine describes the growing popularity of a running training aid system from Nike. The system, called Nike+ (wiki page here) consists of an electronic sensor that attaches to a runner’s shoe; the sensor feeds data to a storage device, the Nike SportBand, or an Apple iPod fit with a small receiver. The system records running duration, pace, and distance data which can then be uploaded to a website allowing for goal setting, tracking, and comparison with other users of the device. Since the introduction of the product in 2006 1.2 million runners have collectively logged more than 130 million miles. Friendly competition and challenges such as fastest 5 miler or first to 50 miles this month type contests amongst groups of users has proliferated. What is behind the device’s popularity? The article cites a famous study performed at Western Electric’s Hawthorne manufacturing plant in Illinois in 1920. Management, trying to discover the most favorable work environment, changed various working conditions (length of breaks, lighting, etc.) measuring performance after each change. After an initial improvement in work performance with the first change, the new higher performance continued with each subsequent change including surprisingly a change back to the original conditions. What Hawthorne managers had discovered is that the motivating factor driving the performance increase was that the workers knew their performance data was being measured and recorded. The effect is now known in Sociology as the Hawthorne effect. Nike is capitalizing on this effect which seems to have a particularly strong influence on athletes and fitness buffs.

I can personally attest to the motivating effect of competition and knowing that I am or will be measured. › Continue reading

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Tags: commission, ipod, La Jolla, LJRWS, motivation, Nike, numbers, sales, SPM

Recession Driving Non-Cash Incentives?

Thursday, March 19th, 2009 | Callidus, Compensation Plans, EIM, Non cash incentive | No Comments

Callidus and IncentOne describe a move by companies to use more non-cash based incentives mixed in with traditional cash based rewards in a jointly released article earlier this week. The headline indicates Challenging Economic Times as a driver. We did not hear much about this strategy from the customers we spoke to during our recent informal survey on the topic, well, unless you would describe job insecurity as a non-cash incentive. Admittedly though, it makes sense: if you don’t have the cash, try using non-cash motivators. Perhaps AIG should have pursued this. Is your company introducing more non-cash incentives into compensation plans in reaction to the tough economy?

-Michael Stus

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Tags: AIG, Callidus, compensation plan, economy, incentive, IncentOne, non-cash, noncash, recession

Reputation as an incentive

Tuesday, January 20th, 2009 | Compensation Plans, Non cash incentive | 2 Comments

Last week a colleague of mine was looking for a way to edit a large XML file; what he needed was to change the value of numbers appearing within a particular tag throughout the file by adding a 0.04 to the existing value. This was required to effect a rate table change within his client’s incentive compensation system. I was not sure of how to make this change so I performed a web search, the results of which directed me to a post on a site called Stack Overflow. I shared the link with my colleague. Though the question and answer did not exactly fit, they seemed like they might help him solve his particular problem.

When I checked back later, my friend informed me that he had posted his exact question on Stack Overflow and almost immediately received four good answers with one that was an exact solution to his problem. Amazing! Wondering what encourages its users to monitor and respond so quickly, I decided to go back and see what makes the site tick. Stack is a collaboratively edited site on which users post computer programming and related questions and answers. Users can perform other actions as well including leaving comments, flagging offensive posts, and leaving comments but users have to earn the right to do more advanced actions. The free (and nearly ad free!) site tracks a concept called Reputation for registered users. Generally when users post good (useful) questions or answers, they earn reputation points. The number and type of actions allowed increases with users’ Reputation point total until users are very much like moderators of the site. Read more about Reputation and the site at its FAQ. Essentially, users are encouraged to help others and make the site better to improve their Reputation which allows them more ability to help and make the site better; it’s a vicious and wonderful cycle that capitalizes on human nature to help one another and to be commended for doing so. Something to think about when formulating incentives for employees and while nurturing your company’s culture.

By the way, due in March is the introduction of an IT focused Stack Overflow site.

-Michael Stus

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Tags: comp plan change, incentive, IT, programming, question, rate table, reputation, spolsky, stack overflow, XML