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Special Compensation for Innovation?

Though the practice is uncommon, some companies offer their employees direct monetary compensation for innovation efforts. However, there may be better ways for management to recognize individual innovators. In this Insight, provided by our partners at the ILO Institute, we hear from the VP for Innovation at a Fortune 500 company about the value of rewarding innovation in more conventional ways.

Special Compensation for Innovation?

U+, in partnership with the ILO Institute, is excited to bring you highlights from ILO’s Weekly Virtual Gatherings. Recently, we heard from a Fortune 500 executive about the merits of compensation for innovation initiatives, and why promotion might be the best reward of them all.

We’ve recently been speaking with a wide range of corporate and large public-sector organizational leadership about compensation and innovation—in particular, whether add-on or special reward compensation for helping specific innovation efforts is common.

The answer: No.

While some companies (like IBM and Spectrum Health) have programs for patent sharing, few pay out in the long run. A very small number, including Verizon, offer impressive sums for winners of annual innovation contests. But the reality for the large majority of employers is captured in this comment from the VP for Innovation at a Fortune 500 CPG firm:

“Every place I’ve worked in a distinct innovation organization, you might get some very minor incentive though even that is frankly not that common.

“What you get if you have a good superior is stronger reviews, a faster path to promotion and a reputation as a valuable part of the organization.

“I work hard for the people who work for me to make sure that their contributions are recognized. At my last company, a big technology manufacturer, my group added $1 billion in value in sales of new products and enhancement to others and in cost savings, that we clearly documented and communicated very carefully over three years.

"I did not get a special bonus or some kind of gain-sharing. I got very strong annual reviews. I moved up a couple of ranks rather quickly, and my compensation went up meaningfully along with that.”

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Launched in 2005, ILO is a membership organization for large companies, government agencies and not-for-profits, bringing senior executives leading innovation together for knowledge sharing and community building. ILO has completed more than 300 best-practice research reports, focusing on emerging challenges and opportunities. To learn more about ILO, membership benefits, and how to join, visit

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