Thursday, 11 April 2013

Pay and motivation, yet again

I said (didn't I say?) that I thought we'd start seeing more scepticism about the value of performance-related pay. The HBR piece I linked too is a decent run-through of some of the academic stuff on this, and it's pleasing to see this kind of thing starting to get prominence.

But it's not just a theoretical question. I was in a meeting in a company recently where the board rep didn't even bother arguing that performance-related rewards "work" to increase performance. They accepted our argument that it's basically junk. I suspect that a lot of board members accept this but - as this company suggested - investors don't give them a consistent message, and it's very hard to be the first mover.

Unfortunately most investors haven't really thought at all about the effectiveness of performance pay and most still seem to believe it is an unquestionably Good Thing. The most depressing result of this is investors getting hung up on trying to tie rewards to non-financial factors to try and encourage good behaviour (if you buy the overjustification/motivation crowding stuff this is actually a very Bad Idea).

Therefore, in my opinion, the best thing we can hope to currently is to try and undermine belief in the value of performance-related rewards. If you're interested in joining my little crusade on this topic, here's a list of pretty easy reading books that will give you more ammo...

      Drive: The Surprising Truth About What Motivates Us – Daniel Pink
      Punished By Rewards: The Trouble with Gold Stars, Incentive Plans, As, Praise and Other Bribes – Alfie Kohn
      Not Just for the Money: Economic Theory of Motivation – Bruno Frey
      Motivation To Work – Frederick Herzberg
      Why We Do What We Do – Edward Deci
      The Hidden Costs of Reward - Mark Lepper and David Greene
      The False Promise of Pay for Performance - James McConvill

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