WHY INCENTIVE PLANS CANNOT WORK

In 1993, Alfie Kohn wrote an article entitled "Why incentive plans cannot
work." For the time it was a radical piece criticising all attempts to
increase employee productivity through incentive programs. Even now it
is even more on the radical side of management and leadership theory.
There is a huge amount of research shows that the highest performing
people are inherently motivated. External motivation is a form of
behavioural therapy, in which a manager will use techniques to motivate
the individual to do something that they otherwise would not want to do.
It may be that the employee would theoretically do the job, but in
practice, would rather take it slower and more relaxed than you want.
Trying to make the employee to do what you want almost all organizations
are using external motivational techniques, such as performance reviews
and incentive programs as the annual bonus.
In his defence, Kohn observed:
Some ideas become so entrenched in the collective psyche, are
perceived to self-evidently correct that not only are they no
longer challenged but they are also no longer even open to
challenge

So, with the paradigm that incentives are almost an accepted

management tool, here's Kohn six reasons why the incentive program
may not work:
1. Pay Is Not a Motivator
This idea was first publicized by W. E. Deming. There is reasonable
research that suggests that the salary is more of a "hygiene factor" than a
real motivator. That is to say, the poor pay makes otherwise happy
employee dissatisfaction, but on the flip side, it is not enough to make a
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disgruntled employee, happy high salary. Research shows that employees

are more likely to be happy for other non-monetary reasons.

2. Rewards Punish
Kohn says that the experience of being manipulated is "likely to adopt a
penalty of quality over time," and that "do not get a reward had been
waiting to get is also indistinguishable from being punished."
Rewards have a punishment effect because they, like
outright punishment, are manipulative. Do this and youll get
that is not really very different from Do this or heres what will
happen to you Kohn, 1993
3. Rewards rupture relationships
Kohn states that will ultimately rewards rupture relationships within the
organization. People will be motivated to get the reward, Which is Usually
different from being motivated to be a great employee and help the
company succeed.
Everyone is pressuring the system for individual gain.
No one is improving the system for collective gain Peter
Scholtes
If the rewards are individual in nature, then the individuals will be focusing
on their performance, no expense of the entire company. They may even
begin to see colleagues as obstacles to their own success.
During a reward system, employees can be tempted to hide the problems
they have, and will be encouraged to introduce themselves to their
manager, as "infinitely competent."

Very few things threaten an organisation as much as a

hoard of incentive-driven individuals trying to curry favour with
the incentive dispenser Kohn

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4. Rewards ignore reasons

There are many reasons that contribute to the employee's performance.
Generally, managers tend to overestimate the effect of an individual's
qualities of performance, while underestimating the impact the work
environment and other factors that contribute to performance. Kohn says
that managers often use incentives as a substitute for real management
and leadership. It is much easier to say that someone is a bad worker,
than it is to try to deal with the real, underlying issues at play. In the same
way, it is easier to hang a carrot in front employees than it is to answer
why management believes that it is necessary in the first place.
5. Rewards discourage risk taking
When rewards are in place, employees focus on getting rewards at the
expense of something that does not help to achieve the reward. If the
measurement of their performance KPI's, when the CPI will be achieved or
exceeded, but unmeasured, unmanaged performance suffers. This all
comes back to one of the most important questions of management when
it comes to motivation.
Do rewards motivate people? Absolutely. They
motivate people to get rewards Alfie Kohn
By focusing on the reward will behaviours that are critical for creative and
innovative thinking to suffer, such as risk-taking. To innovate, you need to
get fail and encouraged to experiment. A reward system will inhibit this.

6. Rewards undermine interest

Research conducted both before and after Kohn's article supports his
claim that in the context of a reward system, people become less
motivated. Over time, the requirement for external motivators becomes a
self-fulfilling prophecy. People, who have continually motivated by external
means, will start demanding more and more external motivation just to
get a standard level of work. The work force will be less interested, less
involved, and the company's performance will suffer.
Great leadership should try to harness and encourage intrinsic motivation,
realising that it is the key to a high performing organisation. They will
avoid techniques that damage it.

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