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Incentives and Rewards - 11 October 2012

 

Of the many idioms in the Spanish language, one of the most fabulous is this: tirar la casa por la ventana. Its definition is ‘to spare no expense’, but the literal translation is “to throw the house out of the window”. So what does throwing a house out of a window have to do with an expression that describes expensive purchases?

The answer can be found in the 18th century. Back then in Spain, there was a peculiar custom that Spaniards followed whenever they won the lottery. Upon realising they’d hit the jackpot, they would rush back to their house and start throwing furniture out of the window and into the front yard. It was a way of showing off. By discarding their old stuff in such an ostentatious way, they were letting their neighbours know they were about to embark on a new phase of opulence.

That historical explanation of tirar la casa por la ventana encapsulates how incentives and rewards operate in the workplace. Generally, there are three stages involved.

Low validation: This is the monetary value of the reward. It feeds your employees’ need for materialism. In the Spanish idiom, it’s the value of the lottery win. In the workplace, it’s the dollar value of the reward you’re offering. An important concept here is something known as ‘deadweight loss’, which means that – on average – people value a gift at only two-thirds of what the gift-giver actually paid for it. Keep this in mind when deciding the size of the reward you’ll be providing.

Medium validation: This is the public recognition that comes from the incentive. It meets your employees’ need for attention. In the Spanish idiom, it’s represented by the garish way in which the lottery winners showed off their newfound luck. In the workplace, it’s the extent to which others are aware of your employees’ success. Some would crave grandiose displays of recognition; others something a little more subtle. Either way, it goes beyond the mere provision of an incentive and necessitates something more egocentric.

High validation: This reflects what someone has to do in order to receive the reward. It supports your employees’ desire for authenticity. In the Spanish idiom, it’s the act of buying a lottery ticket, but such a small exertion of effort results in a lack of high validation. Likewise, in the workplace, it shouldn’t be easy for employees to achieve a goal attached to a reward. The investment of hard work makes the attainment of the reward more worthwhile, whereas an absence of a challenge diminishes the reward’s credibility.

All three validations are essential for an incentive strategy to work. Otherwise, it’s all mucho ruido y pocas nueces – another Spanish idiom that literally means ‘lots of noise and little substance’. Or one of its common interpretations: “Much bragging but little to brag about”.


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