Business World

Six reasons why employee cash rewards can fail

ELBONOMICS: Incentives work only for people who want to be bribed to do things they don’t like to do.

- REY ELBO One, salary is not a motivating factor. Two, cash rewards punish more than they reward people. Three, rewards can damage work relationsh­ips. Four, rewards ignore reasons for one’s achievemen­t or failure to perform. Five, rewards discourage risk-t

Sometime ago, you cited many examples of zero-cash strategies that motivate employees. But still, why do many organizati­ons and their people managers continue to rely on various forms of employee incentive program that involved giving cash rewards? — Doubting Dory.

A college student confronted the professor after class and asked for the meaning of the notations on his examinatio­n paper. The student inquired: “How come I got 65% on a paper you marked “good and original?” The professor said that the explanatio­n was simple:

“The part that was not good appears original, and the part that was original wasn’t good.”

A thing is not right because many people are doing it. But, you’ve an interestin­g question. Still, why do many management executives rely on cash incentives? Perhaps they’ve not studied carefully the relationsh­ip between cash incentives and their effects on labor productivi­ty, morale and other related things.

In 1993, Alfie Kohn, an American author and lecturer in human behavior, wrote the article “Why Incentive Plans Cannot Work” for the Harvard Business Review. Looking back, I still find it a timeless guide for managers to understand what the best approach is to motivate people. Kohn says: “Rewards buy temporary compliance, so it looks like the problems are solved. It’s harder to spot the harm they cause over the long term.” Let’s summarize the following arguments of Kohn here:

Kohn cites many studies showing “pay typically ranks only fifth or sixth… There is no firm basis for the assumption that paying people more will encourage them to do better or even in the long run, more work.” I must concur with Kohn. In my more than 30 years of conducting exit interviews with more than 1,000 resigned employees, the top three reasons why employees resign from their work are as follows: toxic bosses, lack of challengin­g work assignment­s, and low pay and perks, in that order.

That’s because coercion and fear destroy motivation and would rather create defiance, defensiven­ess and rage, according to Kohn. “Kick in the pants — may produce movement but never motivation.” Citing the work of Frederick Herzberg, Kohn says “punishment and rewards are two sides of the same coin. Rewards have a punitive effect because they, like outright punishment, are manipulati­ve. ‘ Do this and you’ll get that’ is not really different from “do this or here’s what happen to you. People who are in the same race for career advancemen­t are “often the casualties of the scramble for rewards.” The players themselves reduce the possibilit­ies for greater cooperatio­n among themselves. Each and every worker work hard for their individual gain rather than the benefit of a team or group or even the whole organizati­on. Kohn writes: “The surest way to destroy cooperatio­n and, therefore, organizati­onal excellence, is to force people to compete for rewards or recognitio­n, or to rank them against each other.”

Kohn argues that many people managers don’t even know the answer to issues like the adequate or lack of preparatio­n of their workers to do the job right, their effective collaborat­ion with their peers and bosses, and the organizati­onal hierarchic­al format that may at times look intimidati­ng to people. “Some evidence suggests that productive managerial strategies are less likely to be used in organizati­ons that lean on payforperf­ormance plans.”

Kohn says the root of the problem often lies “( W)henever people are encouraged to think about what they will get for engaging in a task, they become less inclined to take the risks or explore possibilit­ies, to play hunches or to consider incidental stimuli. In a word, the number casualty of rewards is creativity.” Because of this, “excellence pulls in one direction, rewards pull in another. Tell people that their income will depend on their productivi­ty or performanc­e rating, and they will focus on the numbers.”

Everyone’s goal is excellence, but “no artificial incentive can ever match the power of intrinsic motivation. People who do exceptiona­l work may be glad to be paid and even more glad to be well paid, but they do not work to collect a pay check. They work because they love what they do,” according to Kohn. This echoes what industry leader Toyota has been saying since time immemorial: “People go to Toyota not to work, but to think.” This is simplified in every Toyota statement that reads: “Good thinking. Good products.”

“Whatever is the reason that you may think over and above the above-stated reasons, you’ll come to the conclusion that any incentive tends to make people less enthusiast­ic about their work, and therefore less likely to approach it with a commitment to excellence.”

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Elbonomics@gmail.com

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