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Why salary bonus and other incentives fail to meet their objectives

26 replies on 2 pages. Most recent reply: Jul 31, 2005 8:47 AM by Laphroaig

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Flat View: This topic has 26 replies on 2 pages [ « | 1 2 ]
Michael Feathers

Posts: 448
Nickname: mfeathers
Registered: Jul, 2003

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 16, 2004 6:43 AM
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> Dave,
>
> You seem to b happy with financial rewards, provided
> they're made on a collective rather than individual basis,
> but I'm still curious about how you deal with individual
> performance. Do you just ignore he fact that some
> employees perform better than others? What positive
> incentives do you advocate to get people to improve
> performance? What do you do about individuals whose
> performance you perceive to be poor?

I'm not Dave, but I'll tell you, from my point of view going around and visiting many teams, people either like to program or they don't. When they don't, they and everyone else would be better off if they found something else they liked.

If a programmer has that spark it can still be obscured by morale problems, management issues, lack of clear goals in the organization etc. But, when people have that spark, that internal reward mechanism, and the organizational context is right, they either will improve continuously or they aren't cut out for the work.

Promising people a bonus or a toaster at the end of the year doesn't change this a bit.

Vincent O'Sullivan

Posts: 724
Nickname: vincent
Registered: Nov, 2002

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 6:12 AM
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> ...people either like
> to program or they don't. When they don't, they and
> everyone else would be better off if they found something
> else they liked.

I agree entirely. But that is an 'ideal world' solution. In the 'real world' of programming (which for me takes place in medium to large corporations) you just don't have the luxury of hiring and firing until you get the team you want. You have to deal with the people and resources available to you. I work in the airline industry. Recruiting is not an option at the moment. Many people (with both useful and useless skill) have gone. We have to make do with what we've got. This is where people management can become a sticky minefield.

Advice that addresses how we think things should be, is of little more than acedemic value.

Vince.

Michael Feathers

Posts: 448
Nickname: mfeathers
Registered: Jul, 2003

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 7:14 AM
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> > ...people either like
> > to program or they don't. When they don't, they and
> > everyone else would be better off if they found
> something
> > else they liked.
>
> I agree entirely. But that is an 'ideal world' solution.
> In the 'real world' of programming (which for me takes
> s place in medium to large corporations) you just don't
> have the luxury of hiring and firing until you get the
> team you want. You have to deal with the people and
> resources available to you. I work in the airline
> industry. Recruiting is not an option at the moment.
> Many people (with both useful and useless skill) have
> e gone. We have to make do with what we've got. This is
> where people management can become a sticky minefield.
>
> Advice that addresses how we think things should be, is of
> little more than acedemic value.

Vince, that was an illustration not a proposed solution. Although, frankly some organizations do that. If yours doesn't, that doesn't make it academic.

What I was saying is that incentives are pretty impotent medicine in teams where some people have the spark and others don't.

Jeroen Wenting

Posts: 88
Nickname: jwenting
Registered: Mar, 2004

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 8:36 AM
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> 1. Divide the money equally, regardless of the varying
> salaries of the staff.
>
> 2. Divide the money in exact proportion to salary.

I've seen both and both can work.

Company I work now employs the first approach, everyone gets the same amount (with the condition that you get 50% during your first year with the company), no discrimination on job title or pay grade.
The telephone operator gets the same as the lead programmer or the project manager.
And why not? Is her contribution to the company success less because she has a lower salary or because she doesn't underwrite a bill that goes to a customer?
She IS the first contact a customer has with us, she is the face looking outwards maybe even more than the salespeople.
Is the programmer worth less to the company success than is the project manager? The programmer writes the code that generates the company income, the project manager merely provides the environment in which the programmer can do that job best.
Is the helpdesk person worth less than the person giving demonstrations to potential customers?
He too is the outward face and company conscience, he's there to help customers in trouble, customers who can ruin the perception others have of our products if they're not made happy again in their trouble.

I've also worked in the other kind of company where bonusses were strictly related to your paygrade and seniority in the corporate hierarchy.
Where's the incentive there?

Dale Asberry

Posts: 161
Nickname: bozomind
Registered: Mar, 2004

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 8:42 AM
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For anyone who's interested, I've found an article that is very critical of this one. http://jroller.com/page/pyrasun#treating_professionals_like_hippies

Keith Ray

Posts: 658
Nickname: keithray
Registered: May, 2003

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 11:04 AM
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In training killer whales and other (pretty intelligent) animals (including dogs and people), you try to enhance the behaviors you want, and reduce the behaviors you don't want.

Since you could get your head bitten off if you tried to punish a killer whale, you reduce undesirable behaviors by trying to refocus the animal's [or person's] attention on the good behaviors. To reinforce good behaviors, use praise and recognition and *small* rewards. [You also have to establish trust.]

Check out "Whale Done! : The Power of Positive Relationships"
by Kenneth Blanchard (Author), Thad Lacinak (Author), Chuck Tompkins (Author), Jim Ballard.

Eric Sink

Posts: 3
Nickname: ericsink
Registered: May, 2004

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 11:45 AM
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> The telephone operator gets the same as the lead
> programmer or the project manager.
> And why not? Is her contribution to the company success
> less because she has a lower salary

If the telephone operator is contributing as much to
the company success as the lead programmer or project
manager, why is his/her salary not higher?

The problem I have with Dale's article is that I see no reason not to apply his reasoning to salary as well. If incentive pay is harmful, then aren't salaries harmful as well?

Dale Asberry

Posts: 161
Nickname: bozomind
Registered: Mar, 2004

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 12:27 PM
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The problem is that behaviorism doesn't work with people. People (including very young children) are smart enough to detect when another person is trying to manipulate them (def: to change by artful or unfair means so as to serve one's purpose). This leads to the situation where people will get very good at lying to avoid the stick and cheating to get the carrot.

From the article: Peter Scholtes, has observed, "People don't resist change, they resist being changed." With my children, I've found that scolding (or rewarding) them will likely stop the behavior at that very moment. The problem though is that over time they will grow to resent me and the advice that I give. This leads to a situation where I will need to be more and more directly manipulative to get what I want. In response, they will get more and more secretive, combative, and anti-"whatever it is that I want". My solution: talk to them about the consequences of their choices. Did that behaviour enable you to succeed or cause you to fail? Did you hurt another person in the process? Think before you act. Poor decisions then become teachable moments. Over time, my children have grown to respect some of my wisdom while openly questioning and discovering that which they don't yet understand. They are wonderfully unique, independent, courageous, and self-confident.

Although my example is specifically related to my children, I've seen analogous behaviour in the workplace. People resist being manipulated more than anything else. This means that the best you can do to get another person to do what you want is to appeal to their logic, feelings and experience.

To see more about the ineffectiveness of behaviorism, please read my primary reference: Punished by Rewards: The Trouble with Gold Stars, Incentive Plan$, A’s, Praise, and Other Bribes by Alfie Kohn (http://www.amazon.com/exec/obidos/tg/detail/-/0618001816/qid=1084384267/sr=8-1/ref=pd_ka_1/002-2020026-7265613?v=glance&s=books&n=507846)

Mike Spille

Posts: 25
Nickname: mspille
Registered: Nov, 2002

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 17, 2004 3:21 PM
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Dale, this post and your original blog entry both repeatedly use variations on the word "manipulation". And you tie mechanisms like bonuses in with this, saying that bonuses are a form of manipulation - in fact you are very close to saying "coercion" but just manage to avoid it :-)

For the life of me, I don't see how you manage to tie bonuses to some form of manipulation. In places where bonuses are used effectively, like financial firms on Wall Street, bonuses are not a tool of manipulation. They are a very realistic form of quid pro quo - do well and you will get a good bonus; do exceptionally well and you will get an exceptional bonus. Don't do so well, you will get little or no bonus.

You mention children and "teachable moments". The implications behind your words are that children should expect neither rewards nor punishment.

In fact, what you're saying is that the best system is one where performance has no impact on rewards or punishment. You're removing physical feedback (firing someone or rewarding them with a good bonus are physical feedback mechanisms) and saying that psychological feedback is better.

In my experience, removing physical feedback is exceedingly dangerous. People lose a connection between the real world and their jobs. Many people in this environment grow slack, even get depressed - they realize that it makes no difference _in the real world_ whether they work hard or work just hard enough to maintain steerage. They see that applying their all to a project is no difference then just being mediocre. They see that slackers get the same treatment as stars.

Much of your thesis relies on psychology and psychological rewards, the rewards of teamwork and people working together synergistically. The problem is, that this isn't enough. The satisfaction of working on a good team and doing good work isn't enough. In this sort of environment, since there's no feedback, people start to build up resentments and to drift. It may be a boost in corporate profits that does it - people read the company's got XXX millions from the past quarter, and they'll get none of it. Or it may be a mediocre team member that joins the team - hey, that guy makes the same as I do!

Physical rewards, and physical punishments, are a way to keep people tied into the real world - most often, the real corporate world and the realities of the corporation's current context. They are critical adjustment mechanisms for companies. And above all, they send a message to people. Yeah, feeling good and team work are nice. But when a company hands you a big, fat bonus check, it's _different_. I know - I've worked in such environments and received such bonsues. Morale only gets you so far, but you really know the company cares when they're willing to give you a fat bonus. And likewise, when you _don't_ get such a bonus when the company is booming, that is invaluable feedback to the employee.

You also ignore the fact that morale and psychology can go terribly, terribly wrong. I know people who have been outstanding contributors _who didn't know it_. No matter how much you work with them and praise them, it doesn't sink in. But give them a fat bonus, and it becomes real for them. "Wow - now I know they really meant what they said". Likewise, I've known people who thought they were doing great things when they weren't. And no matter how much you talked to them, either gently or harsh, they live in their own world believing they're great. And they never really understand it until they get a $100 bonus and their neighbor gets a 5 figure one. That's when reality sinks in.

Paul Rivers

Posts: 24
Nickname: paulrivers
Registered: May, 2003

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 18, 2004 2:53 AM
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> If the telephone operator is contributing as much to
> the company success as the lead programmer or project
> manager, why is his/her salary not higher?

Because it's easier to find a telephone operator than a lead programmer or project manager since the job takes less experience and know-how, so they get paid less.

I can't understand why on earth you would want to completely eliminate any performance review. I'm sure there's lot of bad ones, but without some kind of measurement of performance you're just assuming that everyone really wants to do well in their job. They don't, sometimes for reasons like "I need to feed my family, then I'd like to spend time with them" to "I'm lazy" to general bewilderment at what they are supposed to be doing (I've had this).

Isaac Gouy

Posts: 527
Nickname: igouy
Registered: Jul, 2003

Re: Why salary bonus and other incentives fail to meet their objectives Posted: May 20, 2004 4:57 PM
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imo The mistake is to think the same approach works for every person, every time - "respect" is no more the solution than "salary bonus".

Thad Green's "Motivation Management" provides an individual approach to understanding why someone seems to have lost motivation, based on:

Confidence - Can I do it?
Trust - Will outcomes be tied to my performance?
Satisfaction - Will the outcomes be satisfying to me?

Laphroaig

Posts: 1
Nickname: laphroaig
Registered: Jul, 2005

Re: Why salary bonus and other incentives fail to meet their objectives Posted: Jul 31, 2005 8:47 AM
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There's a number of things here I find hard to reconcile. The first (and in my view most flawed) is that all people have the same motivation; some people can be heaped with praise and will not give a damn, others will be driven by this feedback. I suspect most people will, to some extent, be encouraged by this feedback even if they publicly state that it is "all about the money"; however, plenty of people would be willing to tolerate all kinds of unpleasantness simply for money. For some people it really is just working the 9 to 5 and paying the bills.

Secondly, I dislike the simplification that "people either like to program or they don't": my job comprises of many aspects, some of which I like and motivate me, some of which I don't. Even if I spent all my time programming, I might enjoy programming certain modules, in certain languages, on certain systems or at a certain complexity. Most people will have aspects of their job they do not like or feel are pointless. The point is they still have to do them - praising someone's performance on a task they feel is pointless is scant motivation - and unfortunately this is where incentives are required (although they may not be financial). The skill of management is to keep these areas to a minimum.

On a similar note from Mike, "Likewise, I've known people who thought they were doing great things when they weren't. And no matter how much you talked to them, either gently or harsh, they live in their own world believing they're great. And they never really understand it until they get a $100 bonus and their neighbor gets a 5 figure one." I have seen this many times (particularly in young / new employees). There is another logic here: companies are there to make money and will put a value on everything; precious assets such as diamonds will incur expensive security costs and one would question the judgement of a firm that did not make this investment. If I am told I am precious and my salary / bonus / investment does not match, I will wonder why and I will doubt those stating a belief in my value.

Finally (and this loops back into the first point), I think Vince hits the mark when he says, "You say that 'incentives = coercive tactics' but suggest the solution is to replace the position of money in the equation with respect and the like. To my way of thinking, the equation is still the same ..." Anything can be an incentive, from money to working with a friend to doing something as a favour to a promise that "this is the last project in VB I'll ever ask you to work on" and so on. Often they are interlinked, "this will earn you respect" hints at promotion and/or a future salary increase (even if it is not intended to). If any incentive is bad it seems to be that the only way forward is to hire people who do the work purely because they are fated to. There also seems to be an air of judgement here: some people are motivated by money, some people are mercenary; perhaps they should not be, but as long as they do the job and cause no trouble, should we really care?

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