Performance Incentives – Risks of being counter productive

Daniel Pink gave a brilliant talk on TED about the mismatch between “what science knows and what business does”.

A related post on his blog claims that “Money cant buy you performance”.

Some questions that he raised in my mind:

  • When we try to implement scalable business processes, are we trying to “dumb-down” the work to a “mechanical” level?
  • Do performance metrics measure only “mechanical” performance and do we run the risk that incentives based on such metrics could negatively impact creative performance?
  • How can we ensure that we empower our employees with autonomy, mastery and purpose – that Dan proposes as the components of the new “business operating system” in a scalable model?

Especially in B2B sales, every sales manager we have interacted with has requested that our sales pipeline metrics be converted into an incentive scheme. We have been making plans to implement an incentive scheme, but based on the Theory of Constraints – which proposes to measure global performance metrics – that relate performance of individuals or roles to the overall throughput.

It would be interesting to see how Dan’s research ties into the theory of constraints methodology.

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  • tabbyindia

    AsutoshQuite interesting! For creative projects (especially with teams), the idea of rewards to 'inspire' works well (rather than to motivate extra effort) – so different forms of appreciation, recognition and assigning more challenging tasks – is effective, rather than cash or kind.There is a lot of research that shows how and where incentives are effective (and where they are not). For example: to keep all options open, I think!