Problems with Bonuses
Posted on April 3, 2006 Comments (5)
What sort of bonuses should we pay? by Seth Godin:
Money, it’s been shown time and time again, is a demotivator. I’m not talking about a fair or even generous salary. Being a cheapskate is no way to find a great employee. But once people have joined your team, incremental money–bonuses and the like–usually demotivate people.
He is right. Why salary bonus and other incentives fail to meet their objectives by Dale Asberry.
Lean Manufacturing Visionary Jim Womack On Frontiers Of Lean Thinking by Jim Womack
by bonus systems motivating sales staff to make the month or make the quarter and producing a wave of orders at the end of the reporting period. A better approach to these problems is to revamp the bonuses so they are rolling averages rather that don’t encourage big batches of orders.
Good resources:
- Performance Appraisal Problems by John Hunter
- For Best Results, Forget the Bonus by Alfie Kohn
- Peopleware: Productive Projects and Teams by Tom DeMarco and Timothy Lister.
- Systems thinking – management by doing the right thing
- Punished By Rewards: The Trouble With Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes.
- Free, Perfect, and Now: Connecting to the Three Insatiable Customer Demands – A CEO’s True Story by Robert Rodin and Curtis Hartman
Even with salespeople bonus are usually a bad idea, Deming’s ideas at Markey’s Audio Visual:
Commission pay – after 10 people attended Deming seminar they stopped using commission pay “people are not motivated by money” people do have salaries they want or need and will change jobs… to get what they need. For commissioned employees pay set at average of last 3 years salary for 7 commission employees – 1 left.
Commission pay and bonus often set up a conflict between what is in the interest of the company and the employee. They lead to bunching of orders around quarterly quotas, deadlines and competitions. They lead salespeople to think their job is to sell whatever pays them the most not to assist the customer.
Posted by John Hunter
Categories: Deming, Management, Performance Appraisal, Psychology, Systems thinking
Tags: bonus, Deming, demotivate, extrinsic motivation, Psychology
Categories: Deming, Management, Performance Appraisal, Psychology, Systems thinking
Tags: bonus, Deming, demotivate, extrinsic motivation, Psychology
5 Responses to “Problems with Bonuses”
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June 13th, 2007 @ 11:04 pm
Shows of support only are valuable if backed up with actual support…
October 23rd, 2007 @ 8:58 pm
I have posted several times about the need to shift our support to open access science and away from those who want continue outdated strategies that restrict the advancement of scientific ideas…
August 23rd, 2008 @ 6:03 pm
The idea that bonuses are bad management is one of the more difficult management improvement ideas for people to accept…
November 6th, 2008 @ 8:31 pm
Peter Scholtes and Alfie Kohn (among others) do a good job of explaining why it is a bad idea. Douglas McGregor’s Human Side of Enterprise is a good place to start…
November 6th, 2008 @ 8:31 pm
Peter Scholtes and Alfie Kohn (among others) do a good job of explaining why it is a bad idea. Douglas McGregor’s Human Side of Enterprise is a good place to start…