Incentivizing employees to take harder tasks

This is an X-Y problem: the solution is to get a good leader, who recognises the value of people who take on the harder tasks.

If your leader isn't recognising that, you have much bigger problems than the bonus split.

The first problem is easy to solve: you just remove the lead's direct influence on the allocation. At the start of the month you assign points to each task based on its difficulty, and then the bonus is awarded based on the number of points each employee completes.

But the second one is the fundamental flaw with this approach. If base people's rewards on their individual performance, then you naturally dis-incentivise teamwork.

You could solve that by moving the bonus to a team-based one rather than an individual one - so assign points to all the tasks (more points for harder tasks), and then then link the bonus to the total number of points that the team completes. The more harder tasks that get completed between them, the more money they all get. The faster new staff get onboarded and start completing tasks, the more work the team is completing and thus the more bonus they'll get.

But it seems like there's a deeper issue here:

If an employee is free to pick their tasks, they are more likely to pick easier tasks. Harder, perhaps more important tasks are going to stick in the backlog for an indefinite period of time.

It's very unusual to just let staff do whatever they want without any structure, and to allow them to just ignore tasks that they don't feel like doing. If this stuff is important, then it needs to get assigned to someone and completed; if it's not then it should be taken off the backlog.

So it sounds like what this team really needs is for someone to take control and start assigning and managing their work. Because the current free-for-all approach doesn't sound like it's working if important tasks are just being ignored.

The surprising answer is to not give contextual or discretionary bonuses at all, outside of your sales team. They are a demotivational dumpster fire and will destroy your company culture.

"Employee of the month" style winners-and-losers motivational efforts always turn out to be counterproductive, for a whole mess of reasons.

Reduced Intrinsic Motivation: Bonuses can diminish the enjoyment of work itself. Programming is inherently rewarding, but by giving bonuses, you make people focus less on their enjoyment of the work, replacing an "I want to write this code" attitude with a "what's in it for me if I never get the reward" mentality.

Breaks Teamwork: Tying the bonuses to performance can create a competitive atmosphere, fostering rivalry instead of cooperation. Employees may withhold info, or even sandbag/sabotage each other.

Gaming the metrics: Give a bonus for getting more tickets/storypoints done? They'll rush the tickets (harming the product), or split work into more tickets, or estimate tickets as higher points.

Perverse incentives: You get unintended consequences from rewarding the wrong behaviors. For example, a bonus for working large tickets might cause easy, high-impact "low-hanging fruit" tickets to stagnate. Or the tickets that would make your developers happy to work on, don't get prioritized.

Entitlement: Employees might feel they deserve the bonus even if they haven't done much, just because they picked up the "big tickets".

Resentment: This is the biggie. Discrepancies in bonus distribution can lead to resentment and a sense of unfairness. Developers tend to work in their specialist areas, and some areas don't get the "big tickets". Junior devs might only ever get given the small tickets, so even if they work like stink, they'll never get a bonus, and they'll be aware of that.

Short-Term Focus: Bonuses incentivize short-term gains, sacrificing long-term sustainability and strategic goals. Will an employee be thinking "which tickets are strategically best to pick up for the future of the project?" or "which ticket will get me the best bonus?"

Demotivation: If someone gets a good bonus one month, then their next month will be dispiriting, as they will know they won't be able to repeat their previous success.

Metrics: In an ideal world, you'd develop metrics that are both motivating and aligned with overall business goals. But there is no such metric. Not which ticket types get done, not how many storypoints or lines of code. Managers LOVE metrics, they make managers feel informed and in control, but workers HATE metrics, because they remove worker autonomy and force them to game the system and they are always, always obvious bullshit.

tl;dr: Scrap the bonuses entirely. There is nothing good here that can be saved.

Instead, Use the money to give everyone a flat Xmas bonus, or just a straight-up pay rise. If you want to give a variable bonus, then tie it to something VERY macroscopic, which individual contributors cannot directly game. Things like "Company growth" or "annual profits" or whatever.

Rita Keller writes that the bonus plan saga is like a nightmare that keeps repeating itself.

• A partner has a great idea, “Let’s put in a bonus plan! It will inspire our people to do better.” Wrong.
• The ones who don’t get a bonus become jealous.> - Then CPA firm leaders feel guilty because they are not being fair to everyone.
• The ones who do get the bonus usually get it because they can figure out how to beat almost any bonus system.
• Eventually (and it doesn’t take too long) the plan begins to demotivate people.
• Then, the bright idea becomes: “Let’s do away with our bonus plan and build it back into their salaries.” Everyone gets an unexpected raise.
• Several years later, “Let’s put in a bonus plan!”—same thing all over again.

-- via https://www.cpaleadership.com/public/1658.cfm

Get right the heck off that treadmill as fast as you can.

Further reading:

• https://www.fastcompany.com/1140924/why-incentives-are-irresistible-effective-and-likely-backfire
• https://www.library.hbs.edu/working-knowledge/the-dark-side-of-performance-bonuses
• https://www.linkedin.com/pulse/bonuses-fines-can-backfire-how-destroy-team-motivation-effectiveness/
• https://www.primeum.com/en/blog/discretionary-bonuses-are-you-against-or-against

The solution is simple: divide up the bonus equally among the department.

You still motivate people to work harder: the better the results of the group, the higher the bonus. You also don't get the drawbacks you mentioned.

This all depends on the size and nature of the group you're dividing the bonus between.

If I'm in a team of 5 people (say, a software development team) and through effective onboarding I can make my colleague twice as productive, that boosts the team's output by 10% - which could well increase the 'size of the pie' at bonus time; as well taking some work off my shoulders.

On the other hand if I'm in a team of 100 people (say, workers in a call centre) then boosting a single colleague's performance won't move the needle on the KPIs that dictate the bonus, or on my workload.

Likewise, if I'm in a job with raise and promotion potential - then quibbling over one-off bonuses are less important. Sharing my skills, helping others, solving hard problems and pushing the team to achieve its goals is all part of my job description, and in support of my next promotion 'Engineer 5' to 'Engineer 6' which will come with a 20% raise in pay. That more than makes up for any loss in bonus from upskilling a colleague from 'Engineer 2' to 'Engineer 3'.

On the other hand, if I'm working in a call centre where there's no realistic potential for raises or promotions? Well, then you have far fewer incentives at your disposal.

If your organisation is closer to the call centre end of things, and you're having service quality problems with difficult requests going unanswered, you might consider adopting a two- or three-tier system, with junior workers escalating difficult requests to senior workers.

With the teams I have worked with, we've always been motivated just because we felt in charge of the direction of the project and were thinking how to make the project successful.

So naturally we would procrastinate unimportant hard tasks. But prioritize important hard tasks.

It is natural effort to benefit ratio.

Also we took shared responsibility about hard stuff. If I have to refactor the whole billing processing, I don't do it all by myself. But we could discuss approaches, help each other in certain areas, then expect very thorough review from the others to make sure that it is not your fault if things break. Not to say, allocate time for good testing.

So I would discourage rewarding for individual tasks. Rather make the rewards team based. And make sure your lead is asking people what they consider important and who wants to take a crack at different tasks. Also make sure they are not abandoned with some huge pile of work or something they don't have any experience with but daiy check with the person.

In this regard a daily sync call has worked very good for us. If somebody is stuck, can ask if somebody can take a look. Usually a second par of eyes find something missed. Or just trying to explain to somebody, makes your self realize where the issue lies. Actually at least 50% of the time. /rubber duck to the rescue, I have helped some people well, playing the role of a rubber duck/

P.S. also I see that very often such hard tasks - things that changing perhaps affect many parts of the system in unexpected ways, they are impossible to properly estimate. So assigning points, maybe you don't assign enough points for somebody to risk getting caught in an endless single-task nightmare when they can predict they can get on top of 5 simpler tasks.

Mental workers are motivated by feeling important, valued, accomplished or whatever. Very rarely you motivate mental workers with monetary rewards. While they can help it will not be proportional. There was some study that this only helps with physical labor.

But if you still insist on doing that, you can add more points to the tasks that become procrastinated until somebody picks them. Again, I don't find it a good idea.

Read about extrinsic and intrinsic forms of motivation in management sciences or psychology literature.

Bonuses are a form of extrinsic motivation.

Experts agree that intrinsic forms of motivation in the workplace are much more effective than extrinisic ones. This goes into the direction of leaders/managers transporting the purpose of a company and a specific job to the employees. Employees that identify themselfes with a task will autonomously execute the task in a quality they deem best.

Bonuses for regular work make no sense. Instead, point out to the employees that value of their contributions is considered when determining raises and promotions. (In fact, promotions are often given to those who are already working at the next level). If someone truly goes above and beyond -- rescuing the company from a problem that would otherwise turn into a dumpster fire, or achieving a major breakthrough -- THEN consider bonuses. Otherwise just pay folks a decent salary, publicly praise them for success, privately help them past failure, and trust that they're already going to try to do their best work.

Above a certain base level of salary, respect and the pleasure of achieving something challenging is a stronger motivator for engineers than additional cash -- though cash can be used as a tangible token of respect.