It's a truism of American business. In fact, the roots of this
belief lie deep in the Calvinist ethic...but, how true is this
maxim?

In his book, 'Punished by Rewards,' author Alfie Kohn states that
rewards and incentives may induce temporary changes of behavior, but
there are no long-term studies which show a positive correlation
between incentives and job performance. Kohn adds that the news is
even worse when it comes to the impact of rewards on creative
thinking.

Individual rewards reduce risk-taking and collaboration, two key
principles of innovation. (For more about the principles of
innovation, see the InnovationDNA model developed by Innovation
University Fellows and tested and adapted by people in many
different organizations: http://www.thinksmart.com/mission/dna/)

Rewards are also something that is imposed from the outside, a
control mechanism to try to get people to do something that they
presumably would not do with out the 'carrot.' In effect, it says
that the objective is not worthwhile in and of itself ... it's only
a means of getting the reward. The focus becomes the reward rather
than the original objective and this leads to counter-productive
actions and 'gaming the system.'

In an article in the New York Times, Kohn cites the example of a
Midwestern manufacturing plant where an incentive system was removed
at the request of the union. 'Now, if a financial incentive
motivates people, its absence should drive down production. And that
is exactly what happened -- at first. But after the initial slump,
the welders' production rose and eventually reached a level as high
or higher than before.'

Kohn maintains that tapping people's intrinsic motivation to do a
good job is essential. As a remedy for the ailments caused by
incentive programs, he prescribes paying people fairly, 'what they
think is fair,' and then getting money and rewards out of the way of
having people do their job.

When Kohn presented these ideas at the InnovationNetwork's annual
conference, Convergence 99, it generated a huge amount of discussion
which still continues as we try to find ways to apply what seems
like a counter-intuitive principle. Questions abound: 'What about
accountability?' and 'How would you get buy-in for such a radical
change?' and 'How could you possibly implement such a thing?'

It's an interesting prospect to consider. What would an incentive-
free work place look like? What would a punishment-free work place
look like? How could we tap into worker's intrinsic motivation? One
real-life example is available in Rob Rodin's, excellent book:
'Free, Perfect and Now.' (More info about the book:
http://www.thinksmart.com/inmembership/bookshelf/index.html, click
on Organizational Innovation)

More Info:

'Punished by Rewards' by Alfie Kohn
http://www.thinksmart.com/inmembership/bookshelf/index.html
click on 'Thought Stimulators'

For IN Members and InnovationWizard clients:
See Kohn's full article 'For Best Results, Forget the Bonus,'
Go to Articles/Books, People

* Edited by Andrea Woodward, 1998 IU Fellow *