Mike Spille
Posts: 25
Nickname: mspille
Registered: Nov, 2002
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Re: Why salary bonus and other incentives fail to meet their objectives
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Posted: May 17, 2004 12:21 PM
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Dale, this post and your original blog entry both repeatedly use variations on the word "manipulation". And you tie mechanisms like bonuses in with this, saying that bonuses are a form of manipulation - in fact you are very close to saying "coercion" but just manage to avoid it :-)
For the life of me, I don't see how you manage to tie bonuses to some form of manipulation. In places where bonuses are used effectively, like financial firms on Wall Street, bonuses are not a tool of manipulation. They are a very realistic form of quid pro quo - do well and you will get a good bonus; do exceptionally well and you will get an exceptional bonus. Don't do so well, you will get little or no bonus.
You mention children and "teachable moments". The implications behind your words are that children should expect neither rewards nor punishment.
In fact, what you're saying is that the best system is one where performance has no impact on rewards or punishment. You're removing physical feedback (firing someone or rewarding them with a good bonus are physical feedback mechanisms) and saying that psychological feedback is better.
In my experience, removing physical feedback is exceedingly dangerous. People lose a connection between the real world and their jobs. Many people in this environment grow slack, even get depressed - they realize that it makes no difference _in the real world_ whether they work hard or work just hard enough to maintain steerage. They see that applying their all to a project is no difference then just being mediocre. They see that slackers get the same treatment as stars.
Much of your thesis relies on psychology and psychological rewards, the rewards of teamwork and people working together synergistically. The problem is, that this isn't enough. The satisfaction of working on a good team and doing good work isn't enough. In this sort of environment, since there's no feedback, people start to build up resentments and to drift. It may be a boost in corporate profits that does it - people read the company's got XXX millions from the past quarter, and they'll get none of it. Or it may be a mediocre team member that joins the team - hey, that guy makes the same as I do!
Physical rewards, and physical punishments, are a way to keep people tied into the real world - most often, the real corporate world and the realities of the corporation's current context. They are critical adjustment mechanisms for companies. And above all, they send a message to people. Yeah, feeling good and team work are nice. But when a company hands you a big, fat bonus check, it's _different_. I know - I've worked in such environments and received such bonsues. Morale only gets you so far, but you really know the company cares when they're willing to give you a fat bonus. And likewise, when you _don't_ get such a bonus when the company is booming, that is invaluable feedback to the employee.
You also ignore the fact that morale and psychology can go terribly, terribly wrong. I know people who have been outstanding contributors _who didn't know it_. No matter how much you work with them and praise them, it doesn't sink in. But give them a fat bonus, and it becomes real for them. "Wow - now I know they really meant what they said". Likewise, I've known people who thought they were doing great things when they weren't. And no matter how much you talked to them, either gently or harsh, they live in their own world believing they're great. And they never really understand it until they get a $100 bonus and their neighbor gets a 5 figure one. That's when reality sinks in.
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