The bonus myth: paying people for results often doesn’t boost performance

Congratulations to Nic Fleming and the New Scientist on this week’s article (page 42, 9th April 2011). It challenges the almost unquestioned dogma – swallowed by most economists, human resource professionals, headhunters and consultants – that people are motivated by rewards (and in my view, this is partly based on a superficial reading of Maslow’s Hierarchy of Needs).

Fleming’s article quotes Malcolm Higgs, School of Management, Southampton University, who says most bonus schemes are poorly designed because they are too simple (focus on outcomes at the expense of behaviours). Bonus schemes can work as long as they align the interests of individual employees with the long-term goals of a business.

He also quotes Edward Deci, University of Rochester, New York State, on the downside of a bonus culture.

Effective collaboration in my experience is not just product of pursuing clear outcomes (a necessary but not sufficient condition), but also acting according to a consistent set of principles which enables teams to strike a balance between assertion and cooperation, and to blend pairs of opposites – eg outward vs inward looking, positive vs negative, advocacy vs inquiry. Losada’s research demonstrates that teams who connect and generate together produce higher performance.

The Collaborative Strategies Network is sponsoring the launch and planning of the Civil Society Forum on Wednesday 20th April (www.tocollaborate.org) to support strategic thinking and action across the civil society sector.

www.newscientist.com/issue/2807
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2 Responses to The bonus myth: paying people for results often doesn’t boost performance

  1. Anonymous says:

    Sorry about the delayed response. Bernard, it was partly what Deming was saying; but Lucian quoted Malcom Higgs, i.e. that bonus schemes could work if properly aligned. Deming would have snorted derisively at that. His view, one which i share, is that bonuses NEVER work. It is just very lazy management based on McGregor’s X Theory.

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