Material incentives for innovative activity of enterprise personnel based on key productivity indicators of innovation

Development and implementation of innovation is one of the means of providing competitive advantages for a business in a market economy. Innovative activity of a company ought to be expedient from the economic viewpoint and result in reduction of costs and maximizing the profitability of the company’s activity in the long-term perspective. One of essential factors of economic effectiveness of innovation is innovation-active personnel able to generate ideas and quickly adapt to changes, willing and motivated to participate in implementing innovation strategy of the company’s development. Not all employees a priori possess such features, and therefore the company ought to develop and take measures to facilitate their innovative activity. The article introduces the method of material incentives for innovative activity of the personnel suggested by the authors. The method is based on adapting a well-known system of key productivity indicators to innovative activity of a company. Personnel of the company is divided into three categories of employees according to their roles in realization of the organization’s innovative policy, and the authors defined a set of four or five key productivity indicators of their activity for each category. The authors defined a range of quantitative interpretation of the achievable result for each indicator. They suggested a mechanism for calculating the total amount of the incentive bonus which takes into account key performance indicators coefficients of innovative productivity and their value, the size of the bonus wage fund for the employee, the employee’s affiliation to one of the personnel categories established, the number of rewarded employees and the frequency of premium payments. Implementation of the suggested mechanism will ensure objective assessment and reward for the contributions made by all the interested employees into innovative development of the company increasing effectiveness of the production.

1. Solov’yev V.P. Innovation as a systemic process in a competitive economy. Kiev: Feniks; 2006. 560 p. (In Russ.)

2. Akrama Т., Leia S., Haidera M.J., Hussaina S.T. The impact of organizational justice on employee innovative work behavior: Mediating role of knowledge sharing. Journal of Innovation & Knowledge. 2020;5(2):117–129. https://doi.org/10.1016/j.jik.2019.10.001

3. Nguyen P. Employee’ innovativeness: A conceptual framework. Journal of Science and Technology Issue on Information and Communications Technology. 2021;19(6.1):48–53. https://doi.org/10.31130/jstud2021-445

4. Shin S.J., Yuan F., Zhou J. When perceived innovation job requirement increases employee innovative behavior: A sensemaking perspective. Journal of Organizational Behavior. 2017;38(1):68–86. https://doi.org/10.1002/job.2111

5. Belkin V.N., Belkina N.A. Innovative activity of personnel of organization. Economy of Region. 2010;(3):203–210. (In Russ.). URL: https://www.economyofregion.com/archive/2010/33/872/pdf/ (accessed on 21.05.2021).

6. Study on digital and innovative openness of Russian companies in 2020. (In Russ.). URL: https://home.kpmg/ru/ru/home/insights/2020/08/innovationsreport-kpmg-asi.html (accessed on 21.05.2021).

7. Evstafieva A.H., Ermakova A.I. Payment system development in terms of material stimulation employees of companies using KPI indicators. Innovative Development of Economy Journal. 2016;(6-1(36)):119–126. (In Russ.). URL: http://ineconomic.ru/sites/default/files/field_print_version/36-2016.pdf (accessed on 21.05.2021).

8. Zhang Y., Xi W., Xu F. Determinants of employee innovation: an open innovation perspective. Journal of Hospitality Marketing & Management. 2021. https://doi.org/10.1080/19368623.2021.1934933

9. Vinogradova Т.А. Choices of incentive technology of employees’ innovative behavior. Innovative Technologies, Economics and Management in Industry: Proceedings of the VII International Scientific Conference. Volgograd: Konvert; 2021, pp. 154–158. (In Russ.)

10. Glushkova M.A., Glavatskikh O.B. Approaches to the development of an effective incentive system for STAFFKPI based. Sotsial’no-ekonomicheskoye upravlenie: teoriya i praktika = Socio-Economic Management: Theory and Practice. 2018;(4):41–44. (In Russ.). URL: https://istu.ru/storage/documents/izdat/seu/2018-4/seu-2018-4-glushkova-glavatskih.pdf (accessed on 21.05.2021).

11. Klochkov A.K. KPI and staff motivation. A comprehensive collection of practical tools. Мoscow: Eksmo; 2010. 103 p. (In Russ.)

12. Andreykina Е. Awarding project teams: An old new tale. Spravochnik po upravleniyu personalom. 2015;8. (In Russ.). URL: https://www.compandben.org/upload/iblock/0c2/0c2e03674b6f474ee5f927455b9ae188.pdf (accessed on 21.05.2021).

13. Prokofyev S.A. Introduction system of management performance which based on key performance indicators in organization. Fundamental’nye i prikladnye issledovaniya v sovremennom mire = Fundamental and Applied Research in the Modern World. 2014;2(5):133–137. (In Russ.)

14. Tkach E.I. Performance assessment of the personnel management division based on key performance indicators. FES: Finance. Economy. Strategy. 2009;(7):25–28. (In Russ.)

15. Vinogradova T.A., Kuvshinov M.S. Implementation of the assessment and analysis of the level of employees’ innovation behavior. Bulletin of the South Ural State University. Economics and Management. 2021;15(2):132–139. (In Russ.). https://doi.org/10.14529/em210215

16. Fishburne P. Utility theory for decision making. Мoscow: Nauka; 1978. 352 p. (In Russ.)

17. Surkov A.A. The combination of the economic forecasts using expert information. Statistics and economics. 2019;16(5):4–14. (In Russ.). https://doi.org/10.21686/2500-3925-2019-5-4-14

18. Tax code of the Russian Federation (part two) of 05.08.2000 No. 117-FZ (as amended on 02.07.2021). (In Russ.). URL: https://sudact.ru/law/nk-rf-chast2/(accessed on 21.05.2021).

19. Federal law “On compulsory social insurance against industrial accidents and occupational diseases” dated 24.07.1998 No. 125-FZ (last edition). (In Russ.). URL: http://www.consultant.ru/document/cons_doc_LAW_19559/ (accessed on 21.05.2021).

20. Kaplan R.S., Norton D.P. The Balanced Scorecard: Translating Strategy into Action. Boston: Harvard Business School Press; 1996. 329 p.

21. Parmenter D. Key Performance Indicators: Developing, Implementing and Using Winning KPI’s. New Jersey, USA: John Wiley & Sons Limited; 2007. 233 p.