One of the hardest things to do in many companies is to measure employee contributions.

For example, in a company that values innovation and creates tools, processes, or software for speeding up production or services, the flashes of inspiration that employees have while showering, eating, running, tinkering, or engaging in other unrelated activities can be hard to measure and compensate correctly. That 30 seconds of pure inspiration and creativity can be worth more than weeks or months of nose-to-the-grindstone labor.

At the same time, innovative new ideas don’t mean much without a great implementation. Sometimes the work that needs to be done is simply lots of basic tasks where quantity and diligence are key.

So how can you motivate employees to focus on the right activities? How do you quantify employee contributions? How can you compensate them fairly?

The Right Activities

For a company to succeed, there needs to be a good mix of innovation and execution. If employees work longer hours, they show dedication and will produce more of the results you have been getting. Activities that inspire innovation can lead to the breakthroughs that change the rules of the game and allow you to execute a new, more productive plan. If working too many hours begins to get in the way of activities that promote innovation, then you may be missing out on breakthroughs. If all of your time is spent on innovation, you will have lots of new ways to do things, but those tasks won’t be getting done.

Quantifying Contributions

Unfortunately, quantifying employee contributions is very difficult. Exactly how much is an innovative idea worth? Estimates of time saved, quality improved, and extra value added are a good place to start.

Fair Compensation

Employers, knowingly or not, dramatically influence the balance that their employees will choose. If compensation is based exclusively on face-time or clocked-in hours, then employees will give you more hours or balk at the shift in their work-life balance and the loss of free, creative time. If rewards are overly biased towards innovation, there will be too many ideas and too little consensus and execution. Compensation should be mixed to reward both types of behavior. Salaries, benefits, and working conditions are best for rewarding consistent production and face time. Stock options and profit sharing are great ways to reward employees in some kind of fair, flexible way for how much their innovations affect the bottom line.

Contribution Culture

The culture of a company can have a big influence on how employees behave. 3M is famous for requiring its employees to spend 20% of their time on non-project related activities—innovating in search of the next big thing. If innovation and employee development are important, then part of normal work hours should be devoted to these activities. At the very least, project hours shouldn’t be allowed to infringe upon innovation time or the activities that help employees innovate. Employees usually understand the need to put in regular hours in order to get fundamental work done. Encouraging, quantifying, and compensating innovation is the hard part to managing and developing employees and quite possibly the most important to your long-term success.