1. The problem of accurate measurement: For many ideas, it is all but impossible to accurately measure their value.

2. Rewards cause idea myopia: Employees will tend to focus on ideas that promise an immediate payoff, while ignoring other, possibly more significant, long-term opportunities.

3. The problem of fairness: Many corporate idea programs only reward the person who initially submitted an idea. But most ideas are not submitted fully formed and ready for implementation, according to the authors.

4. Reward programs may tempt managers to behave badly.

5. Reward programs can create unnecessary overhead.

For best results, the authors recommend that if an organization must offer rewards, the program should have three attributes:

— It should base the rewards on simple aggregate measurements.
— It should distribute the rewards equitably to all employees using a fair and transparent method.
— It should be integrated as much as possible into how the company already works – into its existing culture and values.

For the complete article on the Innovation Tools Weblog by Chuck Frey, go here.