{"id":43353,"date":"2021-07-31T09:19:24","date_gmt":"2021-07-31T13:19:24","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=43353"},"modified":"2021-08-02T09:25:01","modified_gmt":"2021-08-02T13:25:01","slug":"reward-incentives","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/reward-incentives\/","title":{"rendered":"Reward Incentives: 20 Reasons They Don\u2019t Work"},"content":{"rendered":"\n

What are the top 20 reasons why employee reward<\/a> incentives don’t work? What are the different types of reward incentives that employers offer?<\/p>\n\n\n\n

In his book Carrots and Sticks Don’t Work<\/a>, <\/em>Paul Marciano argues that traditional employee reward incentives such as bonuses and recognition programs don’t actually improve employee performance. Marciano compares reward incentives to dangling a carrot in front of a mule to get it to move.<\/p>\n\n\n\n

Here are the 20 reasons why employee reward incentives don’t work.<\/p>\n\n\n\n\n\n\n\n

Reward Incentives Don\u2019t Work<\/strong><\/h2>\n\n\n\n

The book Carrots and Sticks Don’t Work<\/em> covers 20 reasons that traditional employee reward incentives fail to improve employee performance. As defined here, rewards are primarily monetary and given to select top performers for meeting metrics (picture bonuses for exceeding sales quotas). They\u2019re also commonly considered performance bonuses. Rewards can also be recognition programs, including recognizing employees publicly or giving awards.<\/p>\n\n\n\n

In simple terms, think of rewards as carrots designed to lure people into performing the desired behavior.<\/p>\n\n\n\n

1. Rewards fail because they are short-term.<\/strong><\/p>\n\n\n\n

Rewards programs accomplish specific goals in a short period of time. They don\u2019t set up longer term impacts. Diets don\u2019t lead to long term behavior until they become ingrained as healthy eating.<\/p>\n\n\n\n

2. Rewards don\u2019t work if the person doesn\u2019t want them.<\/strong><\/p>\n\n\n\n

If the worker doesn\u2019t want the carrot, the behavior won\u2019t be reinforced. For instance, someone may get vacation days she doesn\u2019t use, or she doesn\u2019t want to be recognized as the Monthly Peppiest Employee. In some cases the worker may intentionally lower effort to avoid the reward.<\/p>\n\n\n\n

3. Rewards are too narrowly focused.<\/strong><\/p>\n\n\n\n

Rewards programs often target specific narrow goals rather than broader behaviors. For instance, companies often reward making sales<\/a> at the expense of teamwork, trust, and customer satisfaction. <\/p>\n\n\n\n

(Shortform note: recall how Wells Fargo paid narrowly-focused bonuses for creating new accounts, leading employees to defraud bank customers. Had they focused rewards on larger goals like customer satisfaction or word-of-mouth referrals, they would have better avoided the bad behavior.)<\/p>\n\n\n\n

4. Rewards focus on the wrong dependent variable.<\/strong><\/p>\n\n\n\n

They focus on the results<\/em> of behavior, rather than the systems and processes that lead to success in the first place. Imagine rewarding a basketball team for winning games rather than the fundamentals of teamwork, communication, and physical training. The team might be motivated, but they lack the foundation to succeed.<\/p>\n\n\n\n

5. Goals can limit performance.<\/strong><\/p>\n\n\n\n

Fixed goals like sales quotas suggest an upper limit. Once an employee reaches the goal, they have little reason to push harder. Instead, you want workers to keep improving and pushing past their limits.<\/p>\n\n\n\n

6. Rewards are often administered inconsistently and unfairly.<\/strong><\/p>\n\n\n\n

Inequity is especially frustrating to employees. For managers, having to choose how and to whom to dispense rewards invites criticism of favoritism. Some people have an unfair advantage (like seniority) and take the rewards. <\/p>\n\n\n\n

So why not use a % improvement metric, like rewarding people for the % improvement on their performance rather than an absolute improvement? This is demotivating to top performers, who are already squeezing out all they can, and % on their already high improvement can be hard. It also invites manipulation of sinking your sales numbers one quarter to get a big boost the next. <\/p>\n\n\n\n

Often, reward program guidelines are unclear. If your company gives out an award for being a team player, what does being a team player actually mean? If you try your best one time to get a reward, but don\u2019t get it because of unclear guidelines, then you\u2019re going to stop that good behavior.<\/p>\n\n\n\n

7. Rewards add stress for supervisors.<\/strong><\/p>\n\n\n\n

Managers already work hard. Now you add something else that risks politics and dividing the team to their plate. <\/p>\n\n\n\n

8. Reward programs foster cheating.<\/strong><\/p>\n\n\n\n

The higher the stakes, the more you invite unethical behavior. <\/p>\n\n\n\n

(Shortform note: recall again how Wells Fargo paid narrowly-focused bonuses for creating new accounts, leading employees to defraud bank customers. <\/p>\n\n\n\n

9. Rewards destroy teamwork.<\/strong><\/p>\n\n\n\n

Limited rewards invite a zero-sum game approach. If your colleague wins, that means you lose. This promotes competition and undermines teamwork. <\/p>\n\n\n\n

What about team based programs? This may work within a team, but it doesn\u2019t reduce inter-team competition. Also, the top performers will feel annoyed at picking up the slack for underperforming colleagues.<\/p>\n\n\n\n

10.  Rewards cover up ineffective managers<\/a>.<\/strong><\/p>\n\n\n\n

Effective supervisors don\u2019t need programs to motivate their employees. If your employees are unmotivated, this is a management problem<\/a>. Once you remove the rewards program, the bad managers will find it hard to get their teams to do anything.<\/p>\n\n\n\n

11. Rewards programs often offer a weak reinforcement schedule.<\/strong><\/p>\n\n\n\n

Rewards in operant conditioning work best when they are tightly coupled in time to behavior. A good behavior rewarded immediately is established more firmly (think of giving your dog a treat immediately after he obeys a command).<\/p>\n\n\n\n

However, most companies separate rewards far from the behavior, such as end-of-year bonuses. Even if it may reward work done in January of that year, it\u2019s too far to solidify the behavior in the employee\u2019s mind.<\/p>\n\n\n\n

Furthermore, rewards work best when they\u2019re given unexpectedly and have an unknown amount. If employees come to expect rewards, like a standard end-of-year bonus of 20% of their salary, this will cease to reinforce the behavior as strongly. <\/p>\n\n\n\n

12. Giving gifts is not a reinforcement program.<\/strong><\/p>\n\n\n\n

Giving sudden gifts not conditional on behavior is not reinforcement. They don\u2019t change behavior since they\u2019re not tied to behavior.<\/p>\n\n\n\n

13. Rewards reduce creativity and risk taking.<\/strong><\/p>\n\n\n\n

People tend to be risk averse, and if trying out a new strategy means losing out on a reward, they\u2019ll stick to the tried and true.<\/p>\n\n\n\n

14. Extrinsic rewards reduce intrinsic motivation<\/a>.<\/strong><\/p>\n\n\n\n

Increased rewards diminish the perceived value of the task. The worker more thinks that she\u2019s doing the work<\/a> for the rewards, rather than for the work itself.<\/p>\n\n\n\n

In the opposite direction, if the worker is paid little for the task, they tend to enjoy the task more (they must resolve the cognitive dissonance that they\u2019re doing the work for such little pay, that they must love the work instead). <\/p>\n\n\n\n

15. Rewards encourage the wrong behaviors.<\/strong><\/p>\n\n\n\n

Humans are endlessly creative at meeting incentives. Often you may find that you\u2019re reinforcing unintended behaviors. For instance, rewarding top sales may encourage stealing of sales leads.<\/p>\n\n\n\n

(Shortform note: A common antidote to this is use of countermetrics, like rewarding both efficiency and quality so neither comes at the expense of the other.)<\/p>\n\n\n\n

16. In some programs, everybody\u2019s a winner and gets rewards.<\/strong><\/p>\n\n\n\n

In some programs, everyone gets a similar sized bonus, regardless of how well they do. If the bar is set so low that everyone wins, then you draw everyone down to the lowest common denominator. Why work harder if your extra efforts are not valued?<\/p>\n\n\n\n

17. Rewards programs can feel manipulative.<\/strong><\/p>\n\n\n\n

Your top employees are often motivated to do a good job as a moral quality. They want to do a good job for its own sake, and they feel manipulated when you dangle awards in front of them. The top performers also recognize that rewards are used to incentivize worse performers to do better, which is frustrating to high performers.<\/p>\n\n\n\n

18. People who build rewards programs are generally not experts.<\/strong><\/p>\n\n\n\n

HR practitioners tend to be generalists and aren\u2019t deep experts on workplace psychology. Thus it\u2019s hard for them to determine the most effective workplace practices.<\/p>\n\n\n\n

19. Rewards programs have no impact on workplace culture<\/a>.<\/strong><\/strong><\/p>\n\n\n\n

Culture is a set of communal values and expectations that are long-lasting. By virtue of being short-lived, programs do not improve culture.<\/p>\n\n\n\n

20. Reward programs decrease overall motivation.<\/strong><\/p>\n\n\n\n

Who tends to win performance rewards? The top performers. Do they need more recognition and motivation to do well?<\/p>\n\n\n\n

What does this do to the rest of the performers? It lowers performance \u2013 what\u2019s the point of trying if you\u2019re not going to get the reward?<\/p>\n","protected":false},"excerpt":{"rendered":"

What are the top 20 reasons why employee reward incentives don’t work? What are the different types of reward incentives that employers offer? In his book Carrots and Sticks Don’t Work, Paul Marciano argues that traditional employee reward incentives such as bonuses and recognition programs don’t actually improve employee performance. Marciano compares reward incentives to dangling a carrot in front of a mule to get it to move. Here are the 20 reasons why employee reward incentives don’t work.<\/p>\n","protected":false},"author":8,"featured_media":43379,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31,42,30],"tags":[434],"class_list":["post-43353","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money","category-motivation","category-work","tag-carrots-and-sticks-dont-work","","tg-column-two"],"yoast_head":"\nReward Incentives: 20 Reasons They Don\u2019t Work - Shortform Books<\/title>\n<meta name=\"description\" content=\"In the book Carrots and Sticks Don't Work, Marciano says that employee reward incentives don't improve performance. 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