Originally published on LinkedIn on February 22, 2019
I am not a chicken. Nor a pigeon. Or a rat. I neither pluck, peck, flap, gnaw or nip. So why do people think I do? I’m talking about bonuses or, as HR specialists prefer to say, ‘incentive plans’. Research shows that, with the right incentives, you can get animals to behave just as you wish, often in surprising ways. What’s more surprising is when employers believe the same applies to people.
I’m relatively fresh to the concept of incentives, having had an earlier, bonus-free career in government. Since moving to the private sector, I’ve undergone the bonus ritual each February in a foggy state of astonishment. I have not yet come across anyone who truly believes their bonus incentivises their performance.
For one things, the bonus usually owes more to a company’s overall results than the individual’s contribution. For another, employees tend not to understand how it is calculated and thus how they can influence it. For another, it relies on the subjective assessment of the individual’s manager. For yet another, after a while most employees tend to view their bonuses through the prism of what they've received in prior years, rather than their actual recent performance. Most important of all, though, it simply does not influence the people it’s meant to target. Talented professionals generally behave the way they do because they are talented professionals. They are not the kind of people who need bribing. And if they were, I suspect you probably shouldn’t hire them in the first place.
Whenever I’ve raised this with others, the response I tend to get is, “Well if you don’t want your bonus, I’ll have it!” Funny the first few times, but overall a revealing deflection. I’d be more persuaded if they offered an opposing view in defence of incentives. In case of comments below, I do not intend to give mine away. I’m happy enough to take the money. I’m just mildly confused why we put ourselves through a process every year that tends to be unhappy, costly, bureaucratic, and tinged with anxiety.
Why do we do it? It appears to be a hangover from early 20th century research into what is known as operant conditioning. This is the idea that behaviour is shaped by carrots and sticks. Its most influential exponent was FB Skinner, father of the Skinner Box - the contraption that rewarded animals with pellets of food in return for, say, pressing the right button or twirling to command.
That approach works well in animal experiments. The problem is that it just doesn’t apply very well to people. Except for very simple tasks, external rewards not only fail to boost performance. They very often harm it. The research on this is pretty clear.*
That research chimes with my personal experience. My field of work, communications, calls for qualities like creativity, interpersonal skills, strong execution, trustworthiness and a willingness to push boundaries. Pretty much like most professions. It is difficult to imagine how any of these qualities could be incentivised by cash. In my case, at least, I’m clear they are not.
So I will take my bonus. But I don’t want it. Much better for me would be market-busting, predictable basic pay. This would shift the focus of both employee and manager away from money and towards where it should be: performance. My performance, whatever its merits, is not motivated by the dollar. Call me naive but I believe it’s a mistake to think that, like those whiskered seals at SeaWorld, we perform better in the hope of a bigger bucket of fish. Not sure about you, but I don’t flap like that.
After surveying the evidence, motivation researcher Alfie Kohn has concluded that, “No scientific study has ever found a long-term enhancement of the quality of work as a result of any reward system.” In fact, he argues, people actually do inferior work when enticed with external incentives.
The idea that financial rewards can impact performance negatively is supported by Duke professor Dan Ariely. He explains, "When we pay people, we can see an immediate increase in productivity, but what we don't see is we also create a long-term disassociation, where people basically say, 'Really? That's it? That's the reason I'm here?'".
Experiments by psychologists Edward L. Deci and Richard Ryan gives insights why people react this way, showing that monetary rewards reduce intrinsic motivation for work on challenging tasks.
Responding to such evidence, Wharton professors Adam Grant and Jitendra Singh argue it is time to cut back on money as a motivator. They propose we instead focus on intrinsic factors, such as giving employees opportunities to meet customers who benefit from their work. For example, when university fundraisers met a single scholarship student, the number of calls they made per hour more than doubled and their weekly revenue jumped by 500%.
Dan Pink captured the essence of all this research in his brilliant Ted Talk, The Puzzle of Motivation. As he puts it, “There is a mismatch between what science knows and what business does… The secret to high performance isn’t rewards and punishments, but that unseen intrinsic drive — the drive to do things for their own sake. The drive to do things because they matter.”