Product Milestones: The simple method for measuring success of a product team.
Revenue Generated: Another method of measuring success could be to base the success on revenue generated from a product release. Are the developers focusing on the things that lead to profit? (Remember, the purpose of any business is to make a profit.)
Of course, most people are intrinsically motivated, meaning they are motivated by the satisfaction of knowing they did something great and beneficial.
There have of course been studies conducted and blog articles written that suggest that incentive pay is harmful.
a positive review makes them feel like they are doing good work in order to get the positive review... as if they were Pavlovian dogs working for a treat, instead of professionals who actually care about the quality of the work that they do.
So what does that say about the owner of a business whose income derived from the business's profit may fluctuate based on good or poor strategic decision-making?
Business owners aren't incentivized because some manager dictated that as the way he/she will be compensated. Instead, they're incentivized naturally by the capitalist market system. The plain and simple fact is that if the business does well, the business owner is rewarded. If the business does poorly, the business owner is not rewarded.
Does that then mean that clients and customers should be understanding of the business owners predicament and offer some alternative form of reward? Isn't the business owner someone who needs to hear the 'atta-boy' too?
The bottom line, the truth of the matter is that this capitalistic approach has worked for centuries.
I believe that financial rewards, such as profit sharing, are beneficial in terms of getting everyone on the same page in regards to what's important. As long as all parties in the organization have ownership of an area that directly contributes to the profit of the business, then financial rewards can help everyone think more carefully about how their decisions affect the organization.
Again, this only works if you are in control of your destiny. If you, as an employee, cannot make decisions, then this will be harmful to your motivation.
Should financial rewards be the only rewards? I don't think so. I believe the research clearly supports the fact that people are motivated intrinsically and want to feel important, but I also want my developers to be thinking about how their decisions impact the bottom line.
When you're financially motivated, like the owners of the business, you're less likely to spend all your time thinking about how to costly redesign old, ugly legacy systems simply because it bugs you to see
if(true) in the code. When there are dollar signs at stake(or laks, euros, etc), then you are more likely to think about how to generate revenue instead of how to spend it.
DISCLAIMER: I have experienced this first-hand as a developer. The financials have made me think about how to make money, and this has helped me think like an entrepreneur.