Creating an Effective Incentive Program For Software Programmers

Employee incentive programs are powerful tools for improving performance and getting that extra push from your team of employees. Why else would they have been around in one form or another for as long as organized labor itself. However, the main thing to bear in mind, as I have written on in the past, is insuring your reward program incents the right behavior. Moreover, the real challenge is determining the proper metrics that can be used to measure that right behavior.



Historically speaking, in a manufacturing based economy this has typically been a fairly straightforward exercise. Incentives could be based upon number of widgets produced, percentage of pieces passing quality control thresholds, etc. This is not true in today’s knowledge or information based economy. Outside of incentive programs for sales, identifying the proper metrics for employee incentive programs can be very difficult. The very nature of jobs in an information based economy make it challenging to quantify what success is. A prime example of this is where I have spent the majority of my career – software development.



While it is true software development departments and companies manufacture products (they produce software applications), no two applications are alike, so it is unfair to incent based upon the number of applications developed. As a result, many times incentives are project based, meaning a project team is given an incentive to finish a project by a specific date. These are very useful, but used alone they lack the personal accountability and ownership of an incentive plan tied to individual team member performance. In order to address this problem and create individual incentive programs for these types of jobs, I have come up with what I call my own version of the "Pillow Test".



If you are familiar with the term "Pillow Test" you know it as a way to measure someone’s appetite for financial risk. Simply put, if an investment or financial transaction causes you to lose sleep, it is probably not the right one for you. I have my own version of the pillow test for determining the right behaviors to incent and the right metrics to measure for those behaviors. It is a three step process that works as follows:



1. First, I identify the individuals on my team who when assigned to a project or role on a project team, allow me to "sleep like a baby". Meaning, I know it is taken care of (hence, the name "Pillow Test").



2. Then, I determine the traits or qualities these particular persons possess that make me so comfortable with their performance. Examples might be:

a. Rapport with the customer

b. Broad and diverse skillset

c. Thoroughness and defect-free nature of the code they develop

d. Overall conscientious behavior

3. Then I determine what can be used to measure the behaviors usually associated with these qualities and whether or not an incentive program can be developed to encourage these behaviors. Examples might be:

a. Establish end of project surveys with customers, where they rate the performance of individuals with customer facing roles. Then provide incentives based upon survey results.

b. Provide an incentive program for earning technical certifications such as a "Microsoft Certified Solution Developer" or "Java Certification"

c. Use QA metrics to categorize programing changes by Complex, Medium Easy, etc. Track the number of defects per developer, per category and then publish the results on an internal website or some other area that is viewable by the entire company. You may even go one step further and offer a prize for the best results from each category.

d. Create a program where peers and managers can recognize team members for going "above and beyond". When a person is recognized they have their name entered into a monthly drawing for prizes or have a closed loop social network where recognition or flair can be posted on the individual’s wall. This "flair" may also come with points from the company’s employee incentive program.



Due to the qualitative nature of what is being measured, the metrics may not be perfect, but it will definitely get the team thinking the right way – the way you need them to think in order for you to get a good night’s sleep.



If you are looking for an employee rewards program to recognize difficult to measure metrics, LoyalNation can help you design a program with your specific needs in mind.



Danny Abney is the Chief Technology Officer at LoyalNation.com where he frequently blogs about employee rewards and recognition programs.