Why Incentive Plans Cannot Work

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.

. 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.

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.

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

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 paycheck. They work because they love what they do.

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.

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

980s by Richard A. Guzzo, associate professor of psychology at the University of Maryland, College Park, and his colleagues at New York University. The raw numbers seemed to suggest a positive relationship between financial incentives and productivity, but because of the huge variations from one study to another, statistical tests indicated that th... See more

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