Bonus Time

It is the best part of the year.

You have been performance managed and appraised.  Your year-end rating has been cross calibrated / validated / ranked and stacked.  You have emerged from the annual death match unscathed.

Your rating has been moderated to allow for business results.  Senior managers have assessed “the curve” to check it meets stakeholder expectations.  Budgets have been authorised and bonus slips have been printed.

Management effort has been expended, funds are flowing and you got your:

  • Five percent
  • Fifteen percent
  • Fifty percent — bankers, they need the money, mostly to buy friends.

A pay reward for a job well done.  How does it make you feel?  Enthused?  Raring to go?

Of course, you are.  You have been rewarded and incentivised and motivated to do a better job next year. Haven’t you?  Perhaps not…

Bonuses don’t work

At least not according to Alfie Kohn (a social scientist and author of Punished by Rewards).

He believes that when we say… If you do this, then you will get that … and hand out bonuses and rewards for a job well done,  then all we manage to do is kill intrinsic motivation.

This is, of course, sacrilege.  We base our businesses on performance related pay.  In fact we base our society on the same idea — remember school? “if you do this reading then you will get that gold star.”

Mr Kohn is controversial in the extreme.  Pay for performance works, saying anything else is simply not cricket (Un American for my transatlantic colleagues)

Mr Kohn is so Un American he even made Oprah

Oprah Winfrey asked her producers to try out one of the experiments in Alfie’s book.

Behind a hidden TV camera 10 teenagers were asked to test a new puzzle.  Half of them were given $5 for their trouble, half of them were just asked to give the puzzle a go.

What happened when the children were left alone in the room?  You will have to watch the video below to find out.

There are of course better ways to kill motivation than giving bonuses

If you really want to disengage somebody make sure everybody else gets a bonus but not them.

I thought I’d point that out, just in case my boss reads this.

After all, it is bonus time.

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Comments

  1. Hello James
    Are you sure that the bonus is there to reward performance?

    What is the bonus is there to enforce the master-slave relationship first institutionalised as the teacher-student relationship? And to ensure the worker continues to be an obedient student – taking orders, doing the homework, working for the grades, towing the line, reinforcing the superior position of the teacher (in business the boss).

    All the best
    maz

  2. James,
    Mr Kohn makes some interesting and very valid points about intrinsic motivation and control. And, I’ve always found that if you ask motivated, engaged and/or successful people why they do something invariably it’s never about the money or the bonus that they receive. The bonus and rewards are nice but are not the primary driving force behind what they do.

    Why then do we persist with performance related pay? Is it related to what Maz mentions?

    Adrian

  3. James,

    You speak the truth. And I think there’s a happy medium somewhere between what Adrian and Maz say. Performance reviews are painful for those writing them and those receiving them. Being in the midst of this process right now, I have a lot more to say about it than I can succinctly say here in a comment.

    Annette

  4. The only performance measure consistently “improved” by a bonus culture is in people’s ability to play the systemopposed to the original intention (cheating, measuring things differently, stopping trying once a target is hit). This is often to do with ill conceived definitions of success. Now that really is de-motivating…

  5. George Johnson says:

    I agree with Greg. Pay for performance drives a behavior where we do anything to achieve metrics. We’ll even make metrics easier so that we stop progressing all together.

    • James Lawther says:

      Greg / George,

      Why is it that you know that, I know that, everybody knows that, yet we insist on carrying on with incentive schemes?

      Why won’t such a bad idea die?

      James

  6. Mike Adams says:

    For you consideration: while I understand the posts that suggest bonuses may drive bad behavior, that just suggests that conditions need to be included in the definitions of success. Cost cutting efforts need to include “while maintaining or increasing customer sat” as well as ensure process controls for sustainability. I was a player in determining bonuses based on good measures and found that it drove the right behavior if you were careful on what was being measured and that it included dependencies of operating goals, i.e. HR, IT, supply chain etc. With them having skin in the game, good things happened an aligned people to perform on behalf of the company’s success. Bonus are not bad things, bad things only occur when leaders don’t manage to their spirit and intent.

    • James Lawther says:

      That is a very interesting point Mike, I suppose the questions in my mind are:

      1. Do bonuses actually motivate people to do more than the minimum to get the bonus?
      2. Can we set the target conditions robustly enough to prevent cheating?

      I’m not sure the answer to either is an unequivocal “Yes”, but you have seen it work, and I have not so maybe I need to look harder.

      James

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