Hi Katie,

This is a short form of a longer reply I put up on Robert's blog here (given his post prompted your question): http://www.mcgeachy.ca/2010/01/motivation-and-reward-models/

For a start, let me state that I am neither an excellent manager, nor do we have excellent teams (or at least what I would consider excellent, in either terms). Hence, the following are some thoughts I have been working through with a view to improving our/my own performance, and so should be read in that context.

They may prove helpful to some, and some (no doubt) will disagree.

My principles:

1) Get the right people "on the bus" first.

ala Jim Collins "Good to Great"

2) Motivate INTRINSICALLY, not EXTRINSICALLY

As discussed on our blog (blog.global-roam.com)

3) Team based

Rewards for team performance should be shared equally across the team. If you want a team, reward as a team, if you want individuals, pay as individuals.

I am a believer in self-managed teams (even before I had even heard of Agile)

4) Direct link to real value

The criteria for the reward should be linked to real value created

In our case, where we sell shrink-wrapped software, our value is in increased sales from new releases, so we pay bonuses based on profit each quarter.

5) Be agile (small "a")

Try something and, if it does not work, change.

Just make sure you stay true to your core values. I believe this is aligned with what Jim Collins termed "preserve the core AND stimulate progress" in "Built to Last"

Does this help?

Paul