Organizations often measure and reward the individual’s performance and hope for strong collaborative results. However, the “carrot on a stick strategy” is not working when we want employees to collaborate and co-create. Furthermore, internal competition may seem like a good idea, and is still promoted by many well-reputed management consultancy firms. However, internal competition can never go hand in hand with slogans such as ‘winning together’ or other corporate statements reflecting a longing for togetherness and collaboration.
The total compensation to an individual is often linked to both individual performance and the organization's total performance. Combining these quantities often comes with a risk. The risk includes cases when the individual, even if only a minor part, is triggered to behaviors that are not fully supporting the overall organizational objectives. The same rationale obviously applies to various individual KPIs that companies set to measure individual performance, even if they are not linked to any financial compensation. It is of paramount importance that all kinds of compensations and all objectives must be 100 percent aligned with the organization objectives.
Modern organizations need to remove all kinds of incentives that encourage sub-optimizing.
