Two women, one younger and one older, look at a computer monitor in an office. The younger woman is sitting down and has one hand to her chin in deep thought. She has long dark hair and wears a yellow-and-black shirt. The older woman stands, leaning over the younger woman. She has short silver hair and wears a red shirt and red lipstick.
Recognizing creativity in employees requires also acknowledging the creative process and the work that led to a positive outcome. — Getty Images/Ezra Bailey

Creativity isn’t only for artists and poets. Because creativity is essential to innovation, it can bolster business performance. Researchers at consulting firm McKinsey examined the link between creativity and business value. They found two-thirds of companies that scored higher in a measure of creativity also enjoyed above average organic revenue growth, while 70% earned above average total returns to shareholders.

Given the role creativity can play in a business’s performance, it makes sense that companies that optimize how they recognize employees’ creativity should also enjoy greater success. Yet, somewhat counterintuitively, focusing awards and recognition only on the success of employees’ creative efforts can backfire. “It’s not that rewards are inherently bad, but they can have unintended consequences,” said Markus Baer, Ph.D., and Professor of Organizational Behavior at Washington University in St. Louis.

How recognition can hinder creativity

Baer and Dirk Deichmann in the Department of Technology and Operations Management with the Rotterdam School of Management in the Netherlands examined why some first-time successful producers of creative content struggle to repeat their initial success. Their research was published in the Journal of Applied Psychology.

The duo looked at 224 first-time cookbook authors in the United Kingdom. Cookbooks are true creative efforts that often require months of work, Baer noted.

They found that only about half of the authors produced a second cookbook. Moreover, the more novel the initial cookbook, the less likely the creator went on to produce a second cookbook, Baer said. The reason? “…[M]odel-award-winning producers of novel cookbooks (or ideas for them) are less likely to follow-up their initial production with a second one, largely because of the potential erosion to a person's creative identity that doing so may cause,” Baer and Deichmann concluded.

In many organizations, employees who think of themselves as primarily creative often fear that continuing their work will jeopardize this identity, Baer said. After all, it’s difficult to predict how new products or services—essentially, creative endeavors—will fare in the marketplace. Commercial success often is influenced by factors that have little to do with the creativity of a product or service itself.

While most ideas don’t go anywhere, they can be springboards to new or better ideas.

Tucker J. Marion, Ph.D., Associate Professor of Technological Entrepreneurship at Northeastern University

Creativity: reality versus the abstract

When many organizations recognize creative efforts, they tend to focus on the outcome. One reason is that few people understand the creative process, which is rarely straightforward and often involves multiple setbacks. “It’s the abstract attraction of creativity versus the messy reality,” Baer said.

In addition, employees who question established procedures, which can prompt creative ideas, tend to be more difficult to manage, Baer said. Most managers who state an order simply want it followed. “It leads to the repetition of existing work,” he added.

[Read more: How to Encourage Employees to Share Ideas]

Some assume creativity happens magically, Baer said. In reality, however, creative breakthroughs, even if they seem to occur suddenly, typically are the result of extensive, intense work.

Successfully recognizing creativity

To create an environment that encourages sustained creativity, companies need to consider the effort that goes into the creative process and not just the outcome. “Think of it as production process that takes time,” Baer said. For instance, did the creative team challenge existing assumptions? Are they expanding their knowledge base? The more systematically employees engage in these types of activities, the more positive outcomes they’ll produce in the long run, he added.

It’s also important to allow or even encourage failure, said Tucker J. Marion, Ph.D., Associate Professor of Technological Entrepreneurship at Northeastern University.

This doesn’t mean acting with no regard for budgets and the investment of time and other resources that might go into a creative effort, he added. Instead, companies need to leverage failure. That generally means failing fast and moving on. “While most ideas don’t go anywhere, they can be springboards to new or better ideas,” Marion added. In addition, the insight employees learn from the ideas and failures can itself be valuable, he added.

[Read more: How to Boost Your Employees' Creativity]

In contrast, recognizing only the outcome of creative activity can discourage learning and creativity. “If you only focus on the outcome, people become unnecessarily risk averse,” Baer said.

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