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Fabulous. You're dead on.

I would add that incentives become more important as guideposts and touchstones for effort as priorities, strategies and activities continue to change on a faster and faster timeline. Redirecting "existing motivation" is a critical requirement. And... unfortunately, requires more skill than ever since it is changing so much.

Great post Ann.

Thanks, Paul. And great additional point of emphasis - guideposts and touchstones are particularly important as the waters get turbulent and move more quickly.

Appreciate the reinforcement. When Paul Hebert agrees with me, then I know I'm on the right track! :)

Correct. Incentives reflect the motivations of management rather than that of the performer. Incentives, bonuses and all other forms of contingent compensation are superior ALLOCATION methods because they involve quid pro quos beyond the ability of simple fixed salary to achieve.

Variable pay permits the employer to provide constant and compelling (to management, even if not to the actor) communication feedback on goals, progress, needs and adequacy of result output. Whether incentives tap into the motivations of the performer or not, they ease the conscience of the manager who can sleep better at night about the fairness of the reward distribution process and who can better defend payroll cost to the owners. THEY are always the ones most motivated by incentives.

Jim:

True that - incentives do reflect the motivations of management. To that end, they are a communication tool as well as a management tool. Though ideally/hopefully not the only communication/management tools in use (although too often they are). Thanks!

"Incentives reflect the motivation of management" - brilliantly said Jim! And this also nicely speaks to Ann's point about transparency being a motivator. It seems so simple, doesn't it! :-)

Actually the point Deci/Kohn/Pink have been trying to make for decades is that contrary to economists´ believes, people aren't unwilling to work. In fact they even desire to if they are trusted, have sense of shared interest, etc.

You´re not disagreeing with them. You´re spreading their message. Thank you for that.

Thanks for spreading their message, Ann.

Harry and Bill:

While I appreciate your "thanks", it would appear that you are parsing out and enjoying one element of my post out of context - and then missing the bigger point. If you have read any of my posts on this topic (or have heard me speak on it), you would know that I do - in fact - agree with many of their points ... but strongly disagree with their message on rewards.

Ann, you are absolutely right. There is a baseline for how employees behave: their mindset or orientation. I wonder if the purpose of incentives is really to encourage and APPLAUD employees for choosing the mindset that drives the behavior that makes their organization succeed. A mindset that replaces blaming and complaining with asking “what can I do about it”, for example. When employees are making this shift – even in small ways and in small numbers - the organization is improving and so are its results (today) and how it gets results (in the future). Of course there will always be employees who are not making the best choices (for the organization or themselves) and it seems unfair for them too to be rewarded. This is true also of incentive plans designed to influence behavior. There will always be employees who manage to get desired results (and rewards) with undesirable behavior (by leaving dead bodies in their wake, for example).

I think our job (even us Comp Pros) is to help our employees and one another choose the mindset and stay in the mindset that drives our behaviors towards helping one another and the organization be successful. How can we design and communicate rewards to applaud and spotlight the mindset that drives the behaviors? Do I sound naive?

Bill:

Good points all. Naive? Not at all. We have to aim high, don't we?

Thanks for the comment.

Ann, great post as always. If you're correct that incentives do not have the purpose of motivating people, then we sure do have the label wrong! Merriam-Webster defines incentive as "something that incites or has a tendency to incite to determination or action". I do think incentives are meant to motivate, yet perhaps directionally rather than emotionally. I believe that's what you're saying through "guiding" and "signaling" employees. I see it on a spectrum of intrinsic to extrinsic motivation, as opposed to incentives motivate or don't motivate people.

Mercedes:

It starts to feel a little like a semantics challenge, doesn't it? The point I was trying to make is simply that arguments for and against incentives - or contingent rewards - which focus strictly on the question of whether or not money motivates people are missing the broader purpose of variable pay in today's business world.

Always appreciate your thoughtful comments - thanks!

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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