Effect of incentives on worker productivity. Role of rewards and punishments. How to maximize performance.

1. Increasing Academic Quality
• Excellent idea, but
– What is academic quality?
– How will this be done?
– How will this be measured?
• Will it be “rewarded”? (incentivized)

2. Incentives
• Can create short-term performance
improvement
• Do not provide long-term improvement
• Most programs have resulted in long
term damage to the organization

3. So why are incentives used?
• Incentive programs appear to be
intuitive - reward good behavior, punish
bad.
• Consultants are constantly proposing
new incentive programs despite the
data.
• There is an ingrained belief that
incentives must work, even though
experimental data shows the opposite.

4. Harvard Business Review
• “…at least two dozen studies over the
last three decades have conclusively
shown that people who expect to
receive a reward for completing a task
or for doing that task successfully
simply do not perform as well as those
who expect no reward at all.”
"Why Incentive Plans Cannot Work," Harvard Business Review
September-October 1993

5. • …any kind of workplace competition, any
scheme of rewards and punishments, and even
the old fashion trick of "catching people doing
something right and rewarding them," all do
more harm than good.
• Giving somebody positive reinforcement implies
that they only did it for the reward;
• …it implies that they are not independent
enough to work unless they are going to get a
cookie; and it's insulting and demeaning.
DeMarco and Lister: Peopleware, 2006

6. Rewards
• Create punishments
• Rupture relationships
• Minimize creativity and risk-taking
• Undermine interest
Compensation and Benefits Review "Challenging Behaviorist Dogma:
Myths About Money and Motivation," March-April 199

7. The Loop
• Rewards turn play into work and work
into drudgery
• When rewards corrode intrinsic
motivation, the only motivation is the
reward
• This confirms belief in the need for more
incentives
New York Times, "For Best Results, Forget the Bonus,"
(Business section), October 17, 1993

8. If incentives don’t work,
then what does?
• Pay employees well and fairly
• Help them forget about money and think
about their contributions
– Loving what you do is a more powerful
motivator than money or any reward

9. Three C’s of Quality
• Choice - workers should participate in
making decisions about what they do.
• Collaboration - they should be able to work
together in effective teams.
• Content - refers to the job's tasks. To do a
good job, people need a good job to do.