Why Incentive Plans Cannot Work

not receiving a reward one had expected to receive is also indistinguishable from being punished.

author Carla O’Dell reports in People, Performance, and Pay that a survey of 1,600 organizations by the American Productivity Center discovered little in the way of active employee involvement in organizations that used small-group incentive plans.

Herzberg wrote 25 years ago (“One More Time: How Do You Motivate Employees?” January–February 1968), a “KITA”—which, he coyly explains, stands for “kick in the pants”—may produce movement but never motivation.

Behaviorist theory, derived from work with laboratory animals, is indirectly responsible for such programs as piece-work pay for factory workers, stock options for top executives, special privileges accorded to Employees of the Month, and commissions for salespeople

Anyone reading the literature on this subject published 20 years ago would find that the articles look almost identical to those published today.” That assessment, which could have been written this morning, was actually offered in 1975. In nearly forty years, the thinking hasn’t changed.

Do this, and you’ll get that” is not really very different from “Do this or here’s what will happen to you.”

when people are asked to guess what matters to their coworkers—or, in the case of managers, to their subordinates—they assume money heads the list. But put the question directly—“What do you care about?”—and pay typically ranks only fifth or sixth.

Do this, and you’ll get that” is part of the fabric of American life.

His analysis, “Financial Incentives,” published in 1986, revealed that 16, or 57%, of the studies found a positive effect on performance. However, all of the performance measures were quantitative in nature: a good job consisted of producing more of something or doing it faster.