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Indeterminate Heuristics
RE: Why salary bonus and other incentives fail to meet their objectives
by Dale Asberry
May 18, 2004
I'm posting this entry to address what I believe are some of the most interesting misconceptions that have surfaced in conversations regarding my original post.


I'm posting this entry to address what I believe are some of the most interesting misconceptions that have surfaced in conversations regarding my original post

Vincent O'Sullivan airs his concerns:

> Firstly... get rid of bonuses and at-risk pay.

OK, you've removed my primary incentive for anti-social work activities (e.g. overtime, weekend work, pushing for deadlines, etc.). Um, well at least I can spend more time with my family.

> Secondly, get rid of employee evaluations.

Fine. I now know I won't be taken to task for not pulling my weight and doing any of the above when problems occur.

> Finally... the best thing a manager can do is treat employees with respect.

Er? That's it! Instead of the propect of more money for more work, the best I can hope for is that my manager will now respect me?

Sorry mate, I've already got respect. We're in a trading situation. I give my employer work, I get money.

After a bit of discussion, Michael Feathers says:

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.

Keith Ray believes that behaviourism should work with people because it works with animals:

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.

I responded with:

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.

The remainder of this post is dedicated to issues that Mike Spille brings up:

>> 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 :-)<<

1 : to restrain or dominate by force
2 : to compel to an act or choice
3 : to bring about by force or threat

Incentives are not coercive. They are manipulative:
1 : to treat or operate with the hands or by mechanical means especially in a skillful manner
2 a : to manage or utilize skillfully b : to control or play upon by artful, unfair, or insidious means especially to one's own advantage
3 : to change by artful or unfair means so as to serve one's purpose

The important distinction being the use of force versus the use of subtle, crafty techniques to get what you want.

>>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.<<

Study after study after study have conclusively shown that doing nothing is more effective than "paying for performance". I would strongly recommend that you read my original reference - it will point you to the quantitative evidence.

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

Let me clarify then: children should neither be punished nor rewarded. Ibid.

>>In fact, what you're saying is that the best system is one where performance has no impact on rewards or punishment.<<

That's correct.

>>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.<<

To be clear, I have no issues with firing someone. On the other hand, (strangely/amazingly) I've never had to - simply suggesting that the individual is not a good match for the project, team, company, etc has been enough to get them to leave on their own volition. I got them to leave and they got to do it on their own terms. Did they learn a lesson? I hope so, but ultimately, that's up to them.

Regardless, "firing" and "bonus" are not physical feedback beyond being tossed out the door or being handed a check. They are both psychological power-plays that make the person doling the punishment/reward feel like they are in control.

>>In my experience, removing physical feedback is exceedingly dangerous.<<

I've never suggested, even remotely, that feedback should be removed. My managerial success has come from building trust and respect with my reports. I evaluate their abilities and assign them tasks. We negotiate deadlines and I hold them responsible.

Over time, I've realized that most feedback is from them to me: technical problems they encounter, frustrations with coworkers, and interference caused by business processes. My job (as a manager) is to provide direction, eliminate roadblocks, and just listen.

>>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.<<

Here are some more exerpts from an interview with Peter Scholtes in Human Resources, June 1996, pp 11-13 by Richard Rudman:

"The major criticisms, says Scholtes, is performance appraisal's assumption that the problems of an organisation are attributable to the individual performance of individual employees. It also assumes that the way to improve an organisation is to improve each individual employee."


"Scholtes argues that performance appraisal is based on a false premise about why things go wrong in organisations, and how those things should be fixed."

"It's a false theory about problems, and a false theory about solutions. It ignores entirely the existence of systems and, by and large, most managers don't understand systems... If you want to improve what you're doing, you have to improve your systems."

"Scholtes defines a system as a sequence of interdependent steps or a set of interactive factors which lead to the outputs of the organisation."


"Scholtes contends that the objective should be to have outstanding systems which will function well with the ordinary efforts of ordinary employees. Performance appraisal, in contrast, assumes that organisational success depends on the heroic efforts of outstanding individuals and that at the heart of any failure, is an individual worker who has screwed up."

"The fact is that an organisation employs individuals and then puts them into a system where they can perform no better than the system allows. The mistake then is to assume that any problems with the system are the fault of the individual - in other words, the system is okay but you're not doing your job right."


"Feedback is necessary too, but performance appraisal is feed-down rather than feed-back. Feedback is a systems word - one part of a system gives data to an antecedent part of the system so it can do its work to serve the subsequent part of the system better. Performance appraisal is not part of the organisational system but it is part of the organisational hierarchy. I am the boss - you are the subordinate. I don't give you data for system improvement - I give you judgment."

In my words, people lose that connection, not because of punishment or rewards, but because the environment strips them of the power to do their job.

>>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.<<

How did you come to this conclusion? Also, you're stuck on rewards and punishment again.

I've led some amazingly productive teams. When people feel like they are respected, they will bend over backwards to take care of the people they trust. Showing people that they matter by making their job easier or by simply listening are rare skills practiced by precious few managers. I'm hoping that this article will give one manager the ability to take one step toward this goal.

>>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.<<

As Deming, Scholtes, and Kohn have researched and shown, this assertion is simply not true. "The realities of the corporations's current context" rarely has anything at all to do with it's employees. As I stated above, "the fact is that an organisation employs individuals and then puts them into a system where they can perform no better than the system allows. The mistake then is to assume that any problems with the system are the fault of the individual - in other words, the system is okay but you're not doing your job right."

>>You also ignore the fact that morale and psychology can go terribly, terribly wrong.<<

In what ways? The examples you give are hardly "terrible".

>>No matter how much you work with them and praise them, it doesn't sink in.<<

You're right, it won't sink in -- "praise" is another form of reward. The particular problem you mention is more related to that other person's feelings of low self-worth. They repeat the mantra of "woe is me" solely to troll you into continually stroking their ego.

>>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 you've encountered the fundamental difficulty in working with an egomaniac: there is no amount of feedback, punishment or reward that you could ever give them to change their perspective.

The most important and telling issue is how ingrained these concepts are in our society. I think it also goes to show that investing in training of basic psychology relative to individual and group dynamics would go a long way in giving managers at least introductory psychological and emotional skills. I again point the interested reader to Six Seconds.

I'm hoping that what I've said has bugged You enough to go and do the research for Yourself. Regardless of what the "best" solution is, hopefully we will all learn good answers to these questions and our little corner of humanity will make the steps to become better than what it is today.

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About the Blogger

R. Dale Asberry been hacking since 1978, professionally since 1990. He's certified in Java 1.1 and has a four digit MCP number. He discovered Jini at the 2000 JavaOne and has been building incredibly cool, dynamic, distributed architectures ever since! Over time, he's discovered several principles that have contributed to his success - they are the Princples of: Enabling Others, Simplicity, No Complaining, Least Work, Least Surprise, Least Damage, and "It Just Works".

This weblog entry is Copyright © 2004 Dale Asberry. All rights reserved.

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