Today, pay-for-performance is increasingly being trumpeted as the consummate paradigm for almost everything under the sun – be it enhancing motivation, efficiency, creativity, recruitment or retention. The overriding corporate theory is that rewards and bonuses induce employees to work better and better!
Prompted by this rash logic, CEO’s and HR managers are willing to dole out financial rewards and non-monetary incentives by the bushel.
They push rewards and bonus schemes on employees at the drop of a hat without ever stopping to consider a lurking downside to the ‘dangling carrot’.
The question though is do the incentive programmes really work? Will meting out cash payments, gift certificates, T-shirts, complimentary lunches or free cruise holidays really boost even morale, let alone innovation or productivity?
Prompted by this rash logic, CEO’s and HR managers are willing to dole out financial rewards and non-monetary incentives by the bushel.
They push rewards and bonus schemes on employees at the drop of a hat without ever stopping to consider a lurking downside to the ‘dangling carrot’.
The question though is do the incentive programmes really work? Will meting out cash payments, gift certificates, T-shirts, complimentary lunches or free cruise holidays really boost even morale, let alone innovation or productivity?
The misguided carrot and stick
Pay-for-performance schemes may work in the beginning, but in the long run, they backfire and actually turn unhealthy for the company.
The ‘American @ Work’ survey also affirms, ‘Money is especially weak as an incentive when it comes to encouraging employees to think more creatively’.
When rewards and bonuses become the paramount motivators, the workforce is solely driven by the distracting personal visions of reaping the incentives.
Seduced by the dream of earning extra money/perks, employees only work more, not better. In the mad race to figure on the list of achievers, they are willing to compromise on everything that stands in their way, quality included. The initial peak in productivity is more than wiped out by the lasting damage to efficiency and innovation. Ethics, trust, loyalty and commitment to common interests also go for a royal toss.
This apart, linking pay to performance also engenders a battle zone of internal contests that spew injurious competitiveness, backstabbing and constant one-upmanship.
Things turn nasty as employees fight over achievements and do not hesitate to push the blame on others. As such, the spur of financial incentives erodes teamwork, ruins interpersonal relationships, undermines company goals and wipes away creative risk-taking completely.
Moreover, in a culture that supports pay for performance, the preliminary appeal of rewards wanes eventually leaving the organisation totally stranded with a crippled workforce to boot. Alfie Kohn, leading thinker and author of Punished by Rewards rightly observes, ‘Rewards programs cannot work because they are based on an inadequate understanding of human motivation.
One of the most thoroughly replicated findings in social psychology, is that the more you reward people for doing something, the more they tend to lose interest in whatever they did to get the reward. And when interest declines, so does quality!’
Pay-for-performance schemes may work in the beginning, but in the long run, they backfire and actually turn unhealthy for the company.
The ‘American @ Work’ survey also affirms, ‘Money is especially weak as an incentive when it comes to encouraging employees to think more creatively’.
When rewards and bonuses become the paramount motivators, the workforce is solely driven by the distracting personal visions of reaping the incentives.
Seduced by the dream of earning extra money/perks, employees only work more, not better. In the mad race to figure on the list of achievers, they are willing to compromise on everything that stands in their way, quality included. The initial peak in productivity is more than wiped out by the lasting damage to efficiency and innovation. Ethics, trust, loyalty and commitment to common interests also go for a royal toss.
This apart, linking pay to performance also engenders a battle zone of internal contests that spew injurious competitiveness, backstabbing and constant one-upmanship.
Things turn nasty as employees fight over achievements and do not hesitate to push the blame on others. As such, the spur of financial incentives erodes teamwork, ruins interpersonal relationships, undermines company goals and wipes away creative risk-taking completely.
Moreover, in a culture that supports pay for performance, the preliminary appeal of rewards wanes eventually leaving the organisation totally stranded with a crippled workforce to boot. Alfie Kohn, leading thinker and author of Punished by Rewards rightly observes, ‘Rewards programs cannot work because they are based on an inadequate understanding of human motivation.
One of the most thoroughly replicated findings in social psychology, is that the more you reward people for doing something, the more they tend to lose interest in whatever they did to get the reward. And when interest declines, so does quality!’
Recognising right
Well, taking the easy way out with a manipulative, ‘Do this and that will be yours’ is pretty flawed and actually unhinges organisational effectiveness with deteriorating performance standards, morale and productivity.
1. Companies have to perforce dump the traditional programmes that exclusively reward individual performance and concentrate on long-term enhancements.
2. The accent should be on designing new strategies that recognise and reward genuine hard work, innovation, risk-taking, problem solving and growth attitudes.
3. Assemble an appropriate mix of bonuses with cash and non-cash rewards that are both variable and of perceived value.
4. Proffer appealing ‘carrots’ that tie recognition to efforts and encourage employees to improve individual performance even while upholding corporate goals. Also, base the incentives, salaries and even profit-sharing plans on overall team, department and company performance to foster a sense of cooperation, kinship and loyalty.
5. Monitor the implementation on an ongoing basis to eliminate any unintended effects and determine programme effectiveness.
6. Moreover, an annual or six-monthly formal performance review process is disappointingly inadequate in feeding employees’ unabated need to be recognised. Immediate personal reinforcement and on-the-spot praise works wonders that the costliest incentive can never match. As Bob Nelson, asserts in 1001 Ways to Reward Employees, ‘Personal recognition can be more motivational than money. You can obtain from your employees any type of performance or behaviour you desire simply by making use of positive reinforcement.’
This will get their minds off the money factor and orient them to concentrate on the work and goal achievement.
7. Last but not the least, shape the rewards as challenging assignments that present opportunities for personal growth.
Afterall, the job itself is the best motivating factor and can garner untold excitement. To quote management theorist Frederick Herzberg, ‘If you want people motivated to do a good job, give them a good job to do!’
Well, taking the easy way out with a manipulative, ‘Do this and that will be yours’ is pretty flawed and actually unhinges organisational effectiveness with deteriorating performance standards, morale and productivity.
1. Companies have to perforce dump the traditional programmes that exclusively reward individual performance and concentrate on long-term enhancements.
2. The accent should be on designing new strategies that recognise and reward genuine hard work, innovation, risk-taking, problem solving and growth attitudes.
3. Assemble an appropriate mix of bonuses with cash and non-cash rewards that are both variable and of perceived value.
4. Proffer appealing ‘carrots’ that tie recognition to efforts and encourage employees to improve individual performance even while upholding corporate goals. Also, base the incentives, salaries and even profit-sharing plans on overall team, department and company performance to foster a sense of cooperation, kinship and loyalty.
5. Monitor the implementation on an ongoing basis to eliminate any unintended effects and determine programme effectiveness.
6. Moreover, an annual or six-monthly formal performance review process is disappointingly inadequate in feeding employees’ unabated need to be recognised. Immediate personal reinforcement and on-the-spot praise works wonders that the costliest incentive can never match. As Bob Nelson, asserts in 1001 Ways to Reward Employees, ‘Personal recognition can be more motivational than money. You can obtain from your employees any type of performance or behaviour you desire simply by making use of positive reinforcement.’
This will get their minds off the money factor and orient them to concentrate on the work and goal achievement.
7. Last but not the least, shape the rewards as challenging assignments that present opportunities for personal growth.
Afterall, the job itself is the best motivating factor and can garner untold excitement. To quote management theorist Frederick Herzberg, ‘If you want people motivated to do a good job, give them a good job to do!’
PAYAL CHANANIA
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