Rewards for Motivation - Ignorance is Not Bliss

Management Issues posted this article called, Smaller pay raises lead to boom in performance bonuses. Here's a disturbing snippet:

American employers are increasingly relying on performance-related pay awards that must be re-earned every year to attract and motivate their workers.

With wage rises during a period of economic expansion failing to keep pace with inflation for the first time since World War II, most American workers are keenly aware that rising energy, medical and interest rate costs have cancelled out any pay rises they may have earned this year.

But a survey of 1,028 large employers by Hewitt Associates has found that bonuses and performance-related pay deals are increasingly filling this gap.

I don't dispute that this is happening - it is. But what about the fact that the basic assumptions about motivation and optimizing performance are all messed up? Rely on performance bonuses and you are putting a lid potential.

I am really baffled by this trend. Most HR execs are smart and caring folks. The science of motivation is not new, we know what works and what doesn't. It seems as though we are held and being sucked in by a tractor beam of extrinsic reward systems. Why is this the case?

I would love to hear senior leaders and HR execs about this.

My oh my, what's the answer? How can we right this tanker ship that is leaning in the wrong direction?

Emperor with no clothes.
Road to Abiline

Pick your fable - we're in it!

How's this for a book title:

Get Rid of HR: And What to Do Instead

I almost think we need to start fresh.

Comments

[Cathy Thorsen]

Lisa, I hear what you are saying about extrinsic rewards. However, from my observation, it seems that extrinsic motivation is all you have with many employees. If a person is not already internally motivated, what can we do for them that they will not do for themselves? My perception is that there is a predominance of "good enough" workers. These are the people who perform well enough to keep their jobs, but contribute little, if anything, of excellence. It seems to me that extrinsic rewards are a way of giving credit where it is due. Am I missing something?

[Wally Bock]

Too many companies have bought off on the twin ideas of 1) extrinsic rewards and 2) reward systems that will substitute for good front line leadership. Fact: your relationship with your immediate boss is the factor that most affects both your productivity and morale. Fact: less than 7 percent of corporate training budgets are spent on first line supervisors and only a small fraction of that is spent on skill to improve productivity and morale.

It seems like it's cheaper to believe that a fancy reward system will do the trick. It won't. Even in awful organizations, everybody knows who the good bosses are and wants to work for them. In a study I did in police departments, we found that officers would give up significant benefit like preferred days off, day work, etc. in order to work with a great supervisor.

This is all tied up with the things we need to do to help people engage at work. Human beings want to be challenged. They want to do good and meaningful work. They want to be part of something that's bigger than they are. We create those things through human contact, not some extrinsic reward system.

[Troy Worman]

I agree with both Cathy and Wally. Something is very wrong. But I don't know that I have any answers. I do like the idea of dismantling HR. That is, I would like to see HR split into, at least, two different teams: Staffing and Employee Development. (I think most companies have already outsourced Benefits). I also like the idea of a Talent Management Office, a group of folks who would look across the organization for under-utilized talent.

[Lisa Haneberg]

Troy - interesting! The key question I have is what stuff is really great management - in other words, how much of OD is really surrogate management?

[Christian Kuboushek]

I couldn't have put this article together better if I had tried. You are spot on with pay for performance rewards. I was reading an article not too long ago that made the argument that it was actually detrimental to how we do business. They were stating that providing your employees the space, time, and chances to own the work were better motivators. I recently did a meeting with plenty of corporate training materials that referenced it.