A lot of interesting discussion going on at the Compensation Cafe this week; first Becky Regan's post on the new DB(k) retirement plan option (The Next Generation 401(k) is on the Horizon), then Darcy Dees' post reflecting on the future of pay for performance (Food for Thought: Pay for Performance Obsolete?). I can't help but point my readers that way.
Darcy links and shares her response to a video posted recently at KnowHR by Frank Roche, where Frank poses the challenge Everything You Think About Pay for Performance Could be Wrong. (The video is also embedded below for easy reader reference; it is 18 minutes long, but Darcy points out a link on the TED site where you'll find a written synopsis, if you prefer...)
Dan Pink's point is essentially this: that extrinsic rewards narrow creativity and impede problem solving - ipso facto, incentives don't work in today's world.
I agree with Darcy's "food for thought" take on the video. As is often true with a deliberately provocative perspective, I think Dan Pink makes some excellent points ... and also a few that beg to be taken with a grain of salt.
He is absolutely on the money when he calls our attention to the fact that incentives focus people. This is one of the great things about incentives. This is also one of the most dangerous and potentially harmful things about incentives. The classic double-edged sword, if you will. It is also completely true that any effort which focuses the attention of those who must employ creativity and ideation in their roles too closely on narrow tasks and goals is bound to backfire.
But painting all pay-for-performance efforts as narrowly focused carrot and stick campaigns is both an oversimplified and an off-target characterization of business rewards in their various forms. The world of rewards is not that black and white. Incentives and other pay-for-performance plans, in many organizations, are conceived as a way to help employees share in the wealth they create for their employers. Many of these plans, rather than focusing solely on individual accomplishments, are designed as a way to encourage broad collaboration across organizational units and boundaries. In fact, it is just such a broad-based approach that was the focus of a Fast Company article (Viral Innovation) that I posted on awhile back. The Fast Company story, in a nutshell, demonstrates how using incentives to bring attention to cross-unit performance and success can be one more way to encourage the spreading of new ideas and inventive practices across an organization.
In summary, while I think Dan does us all a service by pointing out how poorly conceived incentives can hinder, rather than help, creative work, I don't agree with his conclusion that innovation and pay for performance are necessarily at complete odds with one another.
What's your take? Add your two cents worth to the discussion at the Cafe!