I agree with this, rewards based incentives although seems more fair, it undermines the fact that in a lot of things teamwork wins over individual excellence (Just don’t tell Michael Jordan). In relations to the workplace, bosses are severely inept, or if they are very capable they seldom have the whole picture, this deficiency makes most of their decision subjective to a fault, and as a few experiments have shown us people value themselves according to the people around them, in this setting the boss always loses.  The takeaway is simple, why are there academics who could get jobs in industry but still go the academic route? why is there people in NGO‘s who you can envision leading their own companies, simply put , doing these things make them happy and in the end that is what money is for, to facilitate our happiness by helping us acquire the things (skill/tools/stuff) that would help increase our happiness. If you are the boss your job is to find ways to make the job equate to your worker’s happiness. Look at a well trained and bonded military unit and you’d see that people do seemingly crazy stuff for something beyond money, something beyoond themselves. This is much harder and maybe this is the reason this is not done more often. The default action is throw money at the problem, not find the best solution.!

Let’s file this under “What I’d Do When I Have My Own Company”

Read the whole thing it’s very interesting.

A closer look, though explains why incentive plans not only do not succeed, but cannot succeed:

  • Rewards punish.
  • Like punishments, rewards are manipulative.
  • Rewarding people is similar to punishment for another reason. When people do not get the rewards they were hoping for, they feel punished.
  • Rewards rupture relations.
  • Relationships between supervisors and workers, too, can collapse under the weight of incentives.
  • Rewards ignore reasons.
  • Rewards deter risk-taking.
  • Rewards undermine interest. Loving what you do is a more powerful motivator than money or any other goody.

via For Best Results, Forget the Bonus.

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