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Most companies understand that they must consistently innovate or be left behind by their competitors, but many don’t understand how to reward those who make time for innovation. While most companies believe that financial rewards are the most effective driver of innovation, they often fail to create a direct link between ideas and rewards. In addition, they fail to balance intrinsic and extrinsic motivators, often relying on one or the other.

Annual Bonuses vs Spot Awards

Businesses often rely on annual bonuses as a justifiable reward for innovation, but this approach can prove to be problematic. Managers may forget ideas conceived and implemented earlier on in the bonus cycle causing those ideas to be undervalued come bonus allocation time. Sometimes the time lag can be long enough that even the employee forgets the link between an idea and the reward. This is why any form of employee engagement measurement shows that spot awards for ideas might make more sense.

One idea is to combine the two approaches. Provide a spot award soon after the innovation, but include the idea in calculating annual bonuses. Giving the innovator a spot award means the company is less likely to forget about the idea by the time bonus season rolls around because there is a tangible reminder. However, it is important not to let a spot award reduce the bonus amount that an employee would otherwise have received.

Non-Financial Rewards

Who doesn’t like and appreciate financial rewards? Though, when it comes to rewarding innovation, money isn’t the only way to motivate people. Here are a few non-financial ideas.


Rewarding innovation with frequent promotions keeps ambitious and innovative employees on their toes. Every promotion doesn’t have to come with a corner office and piles of stock options. It can be a simple change in title, or a bigger or better located cubicle. Appointing the employee to be a project leader in a special project task force is another idea.


Most employees do not like being micromanaged, so another good reward is to loosen the reins and give the employee more autonomy. Managers will have to make goals and deadlines clear, but letting the employee manage when and how they perform their work can be a huge motivator. Also, allowing the employee to manage an entire task on their own that they otherwise wouldn’t can give rise to even more innovation as they use their creativity to streamline and improve existing processes.


Some employees simply enjoy the feeling they get once they have mastered a task. While this intrinsic satisfaction can be enough for some, others need more external acknowledgment. Letting the innovator train and educate new employees, or even verbally giving them a title like “process ninja” can also be rewarding.

The Joy of the Task Itself

Some employees find joy in a job well done. They may be happy to be at the top of their game, and they excel at setting personal goals and targets that they enjoy achieving. Just as runners and other athletes work hard to hit a “personal best,” some employees are exhilarated by finding ways to do a job more effectively. These employees are rare though, so don’t just assume that your employees are basking in the glow of a job well done simply because they don’t say anything.

The Manager’s Role

Rewarding innovation is no easy task with tight resources that must stretch to cover large departments, especially when the department covers many complex tasks. When peers don’t understand the complexity of an individual’s role, they may wonder why the company praises one employee and not another. The manager must work to help the team understand the value of all contributions, both large and small, and to reward each employee and innovation in the most appropriate way.

In almost any situation that involves exploring innovative ideas, it’s up to the manager to find the right balance of financial, intrinsic and extrinsic rewards for each employee and each innovation. Often, strict company policies may tie managers’ hands when it comes to rewards and promotions, so they must look to other ways to reward and encourage innovation.

Rewarding Innovation at QAD

At QAD, our employees are one of our biggest assets. It’s important to us that we not only listen to and acknowledge new ideas, but also make our employees feel like they’re being heard when those ideas are presented. Innovation takes many shapes and forms, and it rarely happens overnight. It takes a village coming together, to build relationships with one another and achieve common innovation goals as a team. Rewards don’t always come in the form of a bonus or award either. Sometimes the reward is just the mere fact that innovation can be explored and goals achieved together as a comprehensive team.

How does your company foster innovation? What are you doing to help promote the creation of new ideas in your industry? Let us know in the comments below.