Why Incentive Plans Cannot Work

Incentive programs, and the performance appraisal systems that accompany them, reduce the possibilities for cooperation. Peter R. Scholtes, senior management consultant at Joiner Associates Inc., put it starkly, “Everyone is pressuring the system for individual gain. No one is improving the system for collective gain. The system will inevitably cra... See more

. For each person who wins, there are many others who carry with them the feeling of having lost. And the more these awards are publicized through the use of memos, newsletters, and awards banquets, the more detrimental their impact can be.

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

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

Outside of psychology departments, few people distinguish between intrinsic and extrinsic motivation.

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.

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.

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.

As Jone L. Pearce, associate professor at the Graduate School of Management, University of California at Irvine, wrote in “Why Merit Pay Doesn’t Work: Implications from Organization Theory,” pay for performance actually “impedes the ability of managers to manage.”