How to inspire creativity and reward good employees (like you and me) (page 1 of 3)

And we all have ideas about what these rewards should be (more money, bigger title, bigger office, etc.) But short of giving out stock options that will be worth $500 zillion in six months, how can managers provide meaningful incentives, and rewards, for star performers?

Wharton management professor Anne Cummings recently spoke with an MBA student who related an experience he had while working for an aircraft manufacturer. The student, then a fulltime employee, had come up with an idea that over the long-term would save the company millions of dollars and also potentially save lives. For his effort he had received a pen set. "The 'reward' was a big reason why he left the company," says Cummings. "He told me that he would rather have gotten nothing. But what he would really have preferred was an offer of more autonomy, or another project to work on, or to be given two incoming engineers to help him develop a new idea. It's these kinds of incentives - autonomy, more time, more resources - that creative people respond to."

Cummings' research looks at how managers can structure work environments so that creativity is both fostered and rewarded at a time when many companies are still worried about losing their best talent to dot.coms, a lot of whom offer at least the promise of fast easy money. "I come out of a tradition that says compensation, stock options and other concrete financial rewards are all fine and good, but that they are not always why people stay with a particular company," says Cummings. "I started looking at the models behind creativity, and at what managers can to do to bring out employees' creative functions at work.

"We're all good at something, but we're not all good at everything," she says. "A manager's job is to identify those areas where their employees are most creative, most productive and/or most fulfilled, and then come up with ways to give them autonomy to pursue ideas in those fields. It's less about having a carrot out there as an incentive and more about figuring out where this person will bloom and taking constraints out of his or her way ... In the end, creativity leads to a better work environment. We are all more efficient and more productive when we are doing something we feel engaged by."

Cummings is currently looking at ways in which companies reward failure. As research in this area has noted, the fastest way to shut down people's willingness to take risks is to punish failures that result from that effort. "I'm interested in the whole idea of what aspects of risk-taking get rewarded. How do you evaluate the process? Do you reward good work at the front end of the process regardless of what happens at the back end? How do you avoid rewarding people who go off on useless or wasteful projects without inhibiting the free flow of ideas?"

As part of her research, Cummings has studied where "frame-breaking" ideas in companies originate. "Just because an idea is frame-breaking doesn't mean it's good," she says. "It has to be useful, well thought out, grounded in a real context, and able to be implemented. But if there is a good plan going in, you reward that regardless of the outcome at the back end. How do you know it's a good plan? You look at the due diligence that has gone into it, you study the business plan, you check to see if the employee has done his or her homework.