Incentive systems, motivational programs, and manipulative reward strategies can, in the long term, be crippling to an organization's competitive functioning because they have slowly erased employee commitment to the company along with loyalty to the customer and the product.
So what are the negative effects of overusing incentives?
1. Incentives become entitlements: Managers and employees become addicted to the constant barrage of doo-dads, baubles, trinkets, and award paraphernalia. The annual budget for motivational programs, speakers, and incentives becomes part of the corporate culture and employee compensation. Eventually, management can see no way to decrease the budget for merchandise and cash, because employees see these perks as part of their compensation.
2. Incentives weaken management skills: Why should managers and supervisors learn to facilitate employee performance or address issues that obstruct their performance when short-term incentives appear to do the job for them? This way, managers can abdicate their responsibility for developing their employees and leave it up to the "motivational" system. The core job of managers is to encourage employee engagement and effort through discussions about the work with the employee. Most managers believe that incentive systems and motivational programs negate the need to have meaningful conversations with employees about the work or to develop any relationship with them whatsoever.
3. Incentives devalue the customer, the product, and the work: Constant rewards for work behavior imply that there is no inherent value in doing the right thing for its own sake. The message is that one does a good job or improves because of the award at the end of the rainbow. As a result, employees do not engage with the company's mission. Why should they? The mission is obviously not meaningful if the job is only worth doing for a T-shirt or a ball cap.
4. Incentives enslave employees: Meaningful work to most people is about the value of the work being done and about the feeling that they are creating that value through their own volition. Incentives indenture employees to toil for the next small prize or award. The employee, forced to accumulate points and scores to validate his or her extra effort, is driven by the next incentive in the queue. He or she soon loses the sense of personal accomplishment one feels when one creates something of value. Like a mercenary, one's work is cheaply sold for the next bit of praise or reward that management won't release unless that employee earns his/her share.
5. Incentives erode teamwork: In the midst of motivational programs, incentive initiatives, the competition for recognition, and the lack of any meaningful relationship with the organization, co-workers begin to compete against each other for merchandise and accolades. Mentoring and coaching become much less frequent. Sharing and support vanish. Performers strive to distinguish themselves from their co-workers; they seek to ensure that they are given credit for each and every achievement. Selflessness and the team spirit vanish, because the distribution of merchandise and other rewards creates a system of winners and losers.
6. Incentives destroy management/employee relations: In such an environment, managers seldom seek to coach or build relationships with their subordinates. They see employees as cogs in a wheel driven by the motivational machinery.
This incentive machine depersonalizes the employees in the eyes of managers. Similarly, the employees see the manager as the handler coaxing them with the perennial dog biscuit in hand. The manager controls the distribution of goods, and as such incurs no positive regard from the employee. Employees resent being pulled back and forth like puppets by each new motivational program. They soon learn that when it comes to being recognized for a good job, there are many strings attached.
7. Incentives change self-perception: Selling out for merchandise does not increase self-esteem or enhance self-respect. The mercenary and the patriot see themselves very differently. The incentive frenzy has slowly erased employee commitment to the company along with loyalty to the customer and the product. Unlike the short-term effects of incentives and rewards that must be continually innovated and redesigned lest they lose their novelty and impact, ongoing systems and process improvements permanently facilitate employee performance potential and strengthen the organization's competitive capability. Over the last ten years, performance has improved significantly in those organizations that use participative management and problem solving to engage employees. These organizations encourage employees to identify and resolve the systems and process problems that restrain performance potential.
How would employees perform if their only encouragement was the traditional salaries, raises, bonuses, and promotions? Has the constant bombardment of merchandise incentives eroded the most valuable component of the worker's self-esteem–pride in doing something well? Have the values that drove a strong work ethic been replaced with the instant gratification of trivial rewards?
In the long run, the destiny of our economy and our global competitiveness will depend on the values promoted by our management practices. Doing something well and doing it right can remain an employee value.
Unfortunately, the management teams most likely to depend on incentive programs are also most likely incapable of or disinclined to identify and seek meaningful solutions to the organizational problems that limit employee performance. The strategic importance of management development has been overlooked and the easy gains of incentives have replaced management skills.
Fortunately, the 'quick fix' mentality that created the incentive industry is slowly being replaced by responsible organizational change tools and strategies. Many organizations are in the midst of shifting from incentive-driven to values-driven cultures. However, the easy gains temporarily obtained with merchandise and other incentives are difficult to relinquish entirely. Management still carries a cumbersome carrot on its back.
Most employees don't want these condescending programs in the first place. They want respect and just recognition and reward for a job well done.
Turning back the clock
So what steps can an organization take to get back to the traditional rewards − promotions, earned bonuses, equitable salaries, and worthwhile raises− for performance excellence?
1. Create meaning: The value of the product, service, and customer must be articulated (or rearticulated) clearly and frequently in company documents, advertising, and marketing. Customer experience, product quality, and doing the job right must be the number-one topic of executive conversation.
If the only subject that management talks about is sales and profit, the value of doing a good job and the meaning that people find in their work is perceived as secondary.
So performance reviews and management feedback must reference the value of the service, the product, and the customer. Discussions about results must include talk about the means by which the ends are obtained. In performance discussions, sales and profit must be balanced with references to quality work, happy customers, innovations, creativity, ingenuity, resourcefulness, responsiveness, teamwork, and volunteerism.
2. Create relationships: Managers and supervisors must reengage themselves with employees through dialogues about the work and about the employee's performance. If managers only distribute rewards or administer motivational programs, managers and employees become disassociated and their relationship is purely instrumental; void of feeling, emotions, or the goodwill that establishes reciprocity.
True relationships encourage individuals to become interested in group welfare and they begin to act in ways that serve the interest of the team.
3. Allow employees to participate in the solution: Share your intentions and your rationale with a selected task group that includes frontline employees. Help them understand that you are not trying to remove the value they are receiving from motivational merchandise, but that you want to reconfigure the value into a more traditional compensation framework that allows them to change the way they see the product, the customer, the service, and themselves.
You do not have to convince them or sell them on anything, but you do have to stick by your word. Share your concerns about incentive addiction and its impact on the long-range viability of the company.
Once they understand that it is in their best interest to help you, the solution will be forthcoming. You want employees to feel appreciated. That can only result if their work has true value − not just financial value, but the value placed on work that is exact, competent, and effective.
Every employee wants to feel good about themselves and their job. They want to know that their work has meaning. If you treat them as the important contributors to your organization that they are, they will partner with you in the mission to rediscover the worth of the work and the pride they can feel in doing something well for its own sake.