Rethinking Incentives

Warren Heaps – Birches Group LLC

This post is a bit different from the others that have been written for the Forum.  It’s designed to get you thinking, to entertain you, and to generate discussion.  While not strictly an international human resources topic, incentive pay is a global phenomenon of interest to our readers throughout the world.

There is much written about incentives and motivation.  Organizations spend countless hours fine-tuning their reward programs to optimize business results. Many theories exist to describe these optimal solutions.

But does incentive pay really work?

Recently, a client forwarded a link to a video on this subject, featuring Dan Pink, courtesy of TED: Ideas Worth Spreading . If you are curious  about the answer to this question, or in general, believe that incentive programs sometimes miss the bar, I highly recommend you listen to Dan’s speech.  It’s about 20 minutes long, and it will get you thinking, for sure.

After you watch the video, please add your comments to share with others.

2 responses to “Rethinking Incentives

  1. I would argue that the year 2000 LSE Study cited by Mr Pink is actually a cry for better goal-setting, measurement and appraisal systems.

    “Performance pay in the British public services is …. most commonly awarded on the basis of individual performance appraisal, by each employee’s line manager, against pre-agreed objectives.”

    It has been well documented that relaying solely on soft-goals and the qualitative opinions of Principals and Agents seldom results is measurable better performance. There is an inherent skewing of results based on who is providing the appraisal and the persuasion skills of the staff member.

    There is no “silver-bullet” for this problem. The only way to make compensation work is to use all of the tools available to us. Performance-related Pay (PRP) works if done correctly, but it does not work alone. Autonomy and decision based pay works, but it too seldom works as a stand-alone solution. In fact, Google, one of the companies mentioned specifically by Mr Pink uses a combination and does not rely on a single form of compensation.

    Happy to discuss this further if anyone would like to.

    Thanks for the posting


  2. Thanks for posting. We’re also inspired and motivated by the work of Daniel Pink and appreciate your interest in the man behind the groundbreaking bestseller, A WHOLE NEW MIND. I’m excited to let you know that December 29 marks the release of Pink’s latest book, DRIVE.

    Bursting with big ideas, DRIVE is the rare book that will change how you think and transform how you live.

    Forget everything you thought you knew about how to motivate people–at work, at school, at home. It’s wrong. As Daniel H. Pink explains in his new and paradigm-shattering book Drive: The Surprising Truth About What Motivates Us, the secret to high performance and satisfaction in today’s world is the deeply human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world.

    Drawing on four decades of scientific research on human motivation, Pink exposes the mismatch between what science knows and what business does–and how that affects every aspect of our lives. He demonstrates that while the old-fashioned carrot-and-stick approach worked successfully in the 20th century, it’s precisely the wrong way to motivate people for today’s challenges. In Drive, he reveals the three elements of true motivation:

    *Autonomy- the desire to direct our own lives
    *Mastery- the urge to get better and better at something that matters
    *Purpose- the yearning to do what we do in the service of something larger than ourselves

    We hope Daniel Pink’s DRIVE will open your eyes and change the way you think in 2010!

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