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the article may be right except for a salesman.
scholarly presenation to reinforce the point that cash Incentive is not a motivating factor at all. It is a writing on the wall. R.Sridhar.
Makes perfect sense.
For example, quality of work lacking due to an underlying reason which could be anyone of the following:
-Unclear requirements
-Poor management
-Insufficient equipment
-Lack of direction
-Incompetent employee
...
Seems to me, the proper way to raise productivity would be to fix the underlying problem. Waving $$$ in someones face won't do they job if what you need to do is buy proper equipment, or replace the worker with someone else who is more competent.
You are more likely to piss off the people actually doing to work. Especially when rewarding the wrong person for doing the job. I.E. if my manager got a bonus for me working hard, I would became the laziest employee.
Please forgive in advance any perception of self promotion here, but the research includes references to back a thesis that incentive plans don't work, so here is my rebuttal of how they do work with some actual data.
In 2012, 85% of our clients had an incentive pool distribution because they exceeded a board approved minimum level of acceptable performance.
In 2012, 15% of our clients did not have an incentive distribution because they failed to meet the minimum performance criteria. While the outcome was not what they had hoped for, all agreed an incentive distribution was not earned, so it would not be paid.
In 2012, 100% of the incentive distribution was entirely self-funded via sharing a portion of the CASH contribution created in excess of the minimum threshold; all vested stakeholders in the plan walked away a winner.
It is extremely naive to assume that incentive plans will "auto-magically" fix problems and guarantee that employees will engage in the correct behaviors. An incentive plan is simply one tool that organizations can utilize; many other management tools and practices exist and should be used as well.
Sounds to me like you didn't read the article. What you describe, aside from being entirely anecdotal, is more importantly completely consistent with what he describes concerning temporary compliance.
A vast majority of public companies have both short-term (annual) and long-term (typically 3-year periods+) incentive plan programs in place year after year that make the author's temporary compliance argument inapplicable. The point is that they do not just start and stop these plans at the drop of a hat -- it is ingrained in the executives compensation plans to influence types of behaviors that will increase company performance and share-holder value year after year as well as on the horizon.
Aye, aye...
All that it establishes is that people who performed got paid, and those who did not, didn't get paid. Where is the causality?Also, typically the targets agreed with boards are heavily negotiated and people may keep 'cushions' to get the pay. In that case, all the data shared by Mr. Higgins points to only one thing, "those who are smart enough to negotiate hard get performance pay, others don't". Does bonus improve performance? May be not.
True.