Thursday, 5 April 2012

A few more behavioural snippets

I'm going to delve a bit more deeply into the theory of performance-related pay in my reading over the next couple of months, in order to a) be able present a fair description of what proponents believe (and what most corporate governance folks also implicitly accept) and b) develop a theoretically stronger critique of it. (If anyone is interested, two books I just managed to get cheap second-hand are this and this).

As such I'll be posting up chunks of text as and when I find useful nuggets. I'm still plugging away with Aubrey Daniels' Performance Management, which is all about using positive reinforcement in the workplace. So below are a few interesting (to me) fragments. Bear in mind this is coming from a behaviourist perspective.
If their wage (or salary) is the only incentive, then we should expect the very minimum level of performance, just high enough to avoid being fired. Performing below that level has a very clear consequence: they get fired. Performing above that level has no consequence at all, so there's no incentive for increased effort.
Remember that things that were reinforcing at one time or place may not be reinforcing at another time or place. This means that managers must constantly monitor performance to ensure consequences are still effective. [Does any rem comm do anything like this? As in test the behavioural effects of incentive pay?]
And pointing to other reinforcers -
Money is necessary, but not sufficient, to produce outstanding performance, especially over a long period of time. The best job you will ever have is one that you leave every day, feeling that you made not only a financial profit but a psychological one as well.
Finally, it's worth noting that there are warnings about using positive reinforcement in a manipulative or controlling way, and the negative feelings that may arise as a result. But, as I've argued before, the way agency theory theorises pay is explicitly about controlling directors - aligning their interests with those of shareholders, or 'bonding' them.

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