

For Best Results, Forget the Bonus - davesailer
http://www.alfiekohn.org/managing/fbrftb.htm
Also, "The Folly of Merit Pay" http://www.alfiekohn.org/teaching/edweek/meritpay.htm<p>Home: http://www.alfiekohn.org/index.html<p>Basically, incentive pay has never worked, anywhere, at any time. Go figure. (And it has been hugely studied.)
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costan
"I recommend that employers pay workers well and fairly and then do everything
possible to help them forget about money. A preoccupation with money distracts
everyone -- employers and employees -- from the issues that really matter."

I think this is the takeaway.

In my workplace, we have "peer bonuses". They're small-ish rewards (post-tax,
it'll get you a dinner at a decent place) that some co-worker nominates you
for when you go beyond duty to help them. These bonuses are unexpected and
small, so there's no competition or motivation-ruining.

~~~
gaius
I have to wonder how many managers implement a policy like that but keep
traditional bonuses for themselves.

The cynic in me says a company paying for a study like this will "save" orders
of magnitude more if they follow its advice...

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jacoblyles
>"At a Midwestern manufacturing company, for example, an incentive system that
had been in place for years was removed at the request of the welders' union.
Now, if a financial incentive motivates people, its absence should drive down
production. And that is exactly what happened -- at first. But after the
initial slump, the welders' production rose and eventually reached a level as
high as or higher than before. "

This example in particular cannot be used to support the author's hypothesis.
Someone arguing the contrary point of view could opine that the removal of the
incentive structure did cause a dip in productivity but the plant was in
middle of a long-term rising productivity trend. There is simply not enough
data to confirm or deny this.

Poor math skills and a lack of even-handed skepticism abound in opinion
writing.

~~~
Alex3917
"There is simply not enough data to confirm or deny this."

Are you kidding? This is one of the most studied topics in all of science.
There have been literally thousands of studies on this.

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DannoHung
You should clarify what you mean, and I think what you mean is behavioral
analysis of performance based on differing reward schedules.

As I understand it, and this is fairly amoral, mind you, the best reward
schedule to encourage productivity is to inform subjects that they will be
rewarded for certain activities and then just reward them after a random
number of actions (not time).

Slot machines are the classic example, but I believe you could extend it to
much more exhausting tasks such as rare loot drops in MMORPGs and, ostensibly,
work tasks.

~~~
TheSOB88
Nah, man, not when you want people to _want_ to do the work. That's the point
of the article - people want loot, not killing the same monster over and over.
Likewise, if you give people rewards, they'll want the reward, but they won't
produce quality work because they're just focusing on getting to the goal.

~~~
khafra
Sounds like a very Buddhist perspective on motivation--mindfulness, awareness
of the present, and all that. How do Buddhist companies generally compare to
traditional capitalist companies? Which strategy prevails in, say, Japan or
China?

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akeefer
Does anyone know where something like profit sharing falls on the reward
continuum? It's still a "bonus" in effect, but it's a shared bonus if done
right with no per-person computation and thus no individual component to cause
people to distort their behavior or worry about unfairness. On the other hand,
it can still easily become an expected thing. On the other other hand, it
seems like a reasonable way to reward people for helping create a successful
company. I've read writeups of studies around bonuses, but they're always
around much more targeted per-individual bonuses instead of something
approximating a profit share approach.

~~~
moe
You don't read about it much because profit share is the devil! Communism!
Unthinkable.

Profit share is reserved to the better people, investors, execs. You don't
exist to share profit, you exist to _create_ the damn profit.

Yes, I'm exaggerating a little. But in essence that mindset is pretty much the
norm in "old economy".

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sown
Touching on the point about risk taking makes me think of a reward I would
like to have: the privilege to take risks at work. I have some neat ideas
about our product at Large Network Vendor Inc. I'm willing to work for _free_
exploring these ideas if only I could get a few smattering resources and OK
from my boss. It might fail but it might also be a big boon to the business.
They probably don't let me because of missing business commitments costs more
than a bonus. :(

Or they could reward me with some kind of training. I dunno. Maybe this is the
same thing focusing around "this" and "that".

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gcheong
People also acclimate quickly to whatever rewards are given and come to expect
them. Bonuses eventually become an expected and assumed part of one's salary
especially when there is no transparency as to how the bonus figures are
arrived at.

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ganley
Not news, but bears repeating. What the post doesn't mention is that not only
are the returns on this investment zero at best, but the effects when it is
expected and not delivered are devastating to morale. More than once around
the turn of the millenium I had companies reduce or even zero the annual
bonuses for economic reasons, and it just crushes morale.

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ahoyhere
If you found this interesting, read his book - Punished by Rewards. It's
amazing. I read it at a young age (13 maybe?) and it totally changed my life.

Here's the _real_ takeaway: in this life, almost everyone (at least in the
US?) is conditioned, on every level possible, "do that, get this." It's not
just about money, but approval, self-esteem, good grades, a place in society,
a decent life, a good relationship, healthy children.

We learn this lesson at our parents' knees, it's confirmed in school, and
cemented in employment/college education.

The only _real_ reason to do something is because you love it enough to bring
it into being. (This is not the same as "loving what you do," because the
production of outcomes you love enough to create will inevitably contain work
you aren't going to love in and of itself. Like, for example, exercise and
practice -- not always loveable. The key here is that the love is aimed at the
way you want to change the world, in whatever fashion.)

Anything else is some combination of carrot/stick -- they are flip sides of
the same coin, and neither work well, in the long run, and both lead to
burnout.

Even if you think you "have" to have pressure to produce, you don't. Even if
you think you "have" to have a business goal to create, you don't. Even if you
think you have to taunt yourself with images of what will happen if you don't
do what you "ought to," you don't.

If you can step outside this reactionary type of living model, it's amazing
what you can do.

