Listening to the news on the BBC today it seems the world is as divided as ever about the merits or otherwise of bonuses. The division is split between those who over the last two or three decades have come to expect bonuses as part of the natural order and those that believe the extrinsic motivator or coercive reward strategy has been damaging, both at a corporate and personal level.
Many studies carried out over the past 30 years has shown, overwhelmingly conclusively, that bonus incentive schemes can damage both businesses and individuals by interfering with intrinsic motivation and induce poor behaviour that can lead to lower quality outputs and diminished morale. The ‘Do this and get that’ mentality is not very different to the ‘do this or else’ coercive management strategy that most leaders of wisdom know to be flawed.
Over this time observers, such as Kohn and Deming, have suggested that paying people well and creating a positive working environment is the most effective way to achieve success. Today many organisations reject the coercive reward strategy because of its inherent flaws yet they do not reject bonus systems.
It was interesting to see Patty McCord of Netflix recently stating that they did not pay performance bonuses because; “Netflix believe that they’re unnecessary if you hire the right people. If your employees are fully formed adults who put the company first, an annual bonus won’t make them work harder or smarter”.
Incentivised bonuses are a habit, supported by those who have a vested interest in the sustaining of that habit.
Perhaps though it is time to consider this a habit we should try hard to kick?