You want higher performance from your team; you want them to be motivated – right?
So, the logical thing is to incentivise – right?
Well – maybe not.
The problem is that although using bonuses has been widespread for decades, the evidence of benefit is very mixed [see footnotes]*,**. Inconsistent results, unwanted outcomes and downright failure happen much of the time. Bonuses for simple tasks like fruit picking or car washing may persuade workers to work faster, but you have to be certain they are not cutting corners or creating problems from rushing the task. Today’s workers mainly do complex stuff, which is a very different situation from the simple task above: and individual bonuses potentially mess up the team dynamic, create negative-impact-competition and often make performance worse.
Here are 7 possible problems described by Pink** .
Intrinsic Motivation is the reason we do things other than for money [we believe it is a good thing, we enjoy doing it etc]. Extrinsic Motivation is the bonus. When you pay for things, the risk is that people change their approach to what is asked. With a driver other than good intention, their goodwill reduces, focus is limited, so creativity diminishes, and they are tempted to cheat or take shortcuts to get the money. Their approach is now on short term gain rather than building for the future and they addictively come to expect the bonus, as a right. Sadly, the evidence shows that outcomes are often not as good.
So no bonuses then?
Perhaps the secret is to do something that is proven to work, e.g. boost Intrinsic Motivation by working on your workers State of Mind via better Leadership, creating Followership and ensuring good organisational and jobrole fit. See my video. If you want to offer a monetary reward, this could be for the whole team and limited to when there are successes, or the business is building well, but not predictably at the year end or every Christmas. This is then more like the successful John Lewis partnership model.
There is a case that Sales Teams or Investment Banks are different. I deal with this and discuss the technicalities in Bonuses Part 2.
Want help with driving performance?
We run programmes to boost individual and team performance and solve your people problems. For a free consultation email nick@gholdenphish.com.
* Do financial incentives drive company performance? Chapter 5 in Hard Facts, Dangerous Truths & Total Nonsense; Pfeffer & Sutton, Harvard Business School Press, 2006
** Seven reasons why carrots and sticks [often] don’t work. Chapter 2 in Drive; Daniel Pink, Canongate, 2009
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