Line of Sight Makes Incentives Work
Use expectancy theory to test whether incentive metrics have motivational line of sight.
A bonus metric is not motivational just because it is measurable. The expectancy chain Expectancy theory says motivation depends on three linked beliefs: effort improves performance, performance leads to reward, and the reward is valuable. In compensation strategy, this becomes the line-of-sight test for incentives. Where incentive plans break Expectancy breaks when employees do not believe their effort can affect the metric. Instrumentality breaks when they do not trust that performance will actually lead to payout. Valence breaks when the reward is too small, too delayed, or not valued by the group. Company metrics need local anchors Company metrics are…
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