Why Building an In-House Incentive System Might Not Be Your Best Bet

In the dynamic world of business, the phrase "My IT team is going to build our incentives system in-house" is becoming increasingly common. On the surface, it seems like a logical step. After all, who knows your business better than your own team? However, as with many things in the corporate realm, the devil is in the details.

The Overlooked Aspects: Non-functional & Implicit Requirements

Every IT project has its set of explicit requirements - the clear, defined tasks and goals that need to be achieved. But incentive systems have a myriad of non-functional and implicit requirements that are often overlooked. These can range from system performance under load to the user experience for end-users. Missing out on these can lead to a system that, while functional, misses the mark in delivering optimal results.

The Challenge of Time: Parallel Processing

Incentive systems are unique in that they often need to process two periods simultaneously. This requires a robust system architecture that can handle parallel processing without any hitches. It's not just about getting the numbers right; it's about getting them right on time, every time.

Remembering the Past: The Importance of History Storage

While it's essential to focus on the present, an efficient incentive system also needs to have an eye on the past. Storing historical data is crucial for trend analysis, auditing, and ensuring consistency in incentive distribution.

The Intricacies of Eligibility

Perhaps one of the most complex parts of an incentive system is defining eligibility. It's not just about setting criteria; it's about ensuring they align with the company's goals, are fair, and can be adapted as those goals evolve.

Flexibility: Adapting to Changing Business Goals

The corporate world is ever-evolving, and your incentive system should be no different. It needs the flexibility to adapt to changing business objectives, ensuring that incentives always align with the company's current direction.

Beyond Calculations: Communication is Key

An incentive system isn't just a calculator. It's a communication tool. The way incentives are communicated - the transparency, the reports, the motivational elements - plays a significant role in the system's success. If employees don't trust the system or find it demotivating, even the most accurate calculations won't achieve the desired results.

Conclusion: Trusting the Experts

Building an in-house incentive system might seem like a cost-effective and tailored solution. However, the complexities involved make it a challenging endeavor. We've seen many in-house projects that, despite years of effort, failed to deliver an optimal system. Incentive systems are a specialized domain, refined over years by experts. Sometimes, it's best to stand on the shoulders of giants.

About Author

Sujeet Pillai

As an experienced polymath, I seamlessly blend my understanding of business, technology, and science.