Our discussion today made me think of an article I read during my undergraduate degree at Copenhagen Business School. In his article “Why Incentive Plans Cannot Work” from 1993 Alfie Kohn makes some of the critical points about rewards very clear. I think his stand on the issue is best illustrated by a couple of direct quotes:
“… rewards succeed at securing one thing only: temporary compliance.”
“They do not create an enduring commitment to any value or action.”
“Everyone is pressuring the system for individual gain. No one is improving the system for collective gain.”
“The number one casualty of rewards is creativity. As the late John Condry put it, rewards are the “enemies of exploration.””
I feel convinced that there is some truth to his standpoints although they tend to be a bit extreme and portray the issue as in a black and white manner. No matter what I definitely think it’s a piece worth taking into account when discussing the effects of incentives.
Interesting approach. External or extrinsic rewards may not inspire deep commitment.
Although I think a big bonus for example can get people fired up in their work, tapping their emotions to make an extra effort.
I think the problem may not be so much that incentive plans inherently can’t work, but that it is incredibly challenging to identify the right incentives.
For instance, in one of the cases we read the CEO had to specify out a line-item in quarterly performance reports from his Vice Presidents to ensure they were focusing on that item, as they knew they would be rated based on those reports. But it would be much harder to incentivize them in a way that had many externalities, and was more of a Tragedy of the Commons situation (e.g. how do you reward someone who let the best person on their team leave to join a different project where he or she could achieve even more for the company?).