Q3 Dr Lisa: As you know we recommend against most incentive or bonus programs. How does the prevailing belief by Western management that incentives are effective relate to the “best efforts” contract?
Tom: Yes, incentives are effective. They are most effective at creating mistrust in the organization. They violate the implicit contract between the employer and employee. Incentives lay the groundwork for counterproductive relationships and sow the seeds for deceit. Incentives pit manager against employee in a game of underperformance, where the carrot rules.
Even worse, managers use incentives to abdicate their responsibility to hold people accountable for performance. Managers throw up their hands and say, “the only way I can hold my people accountable is to withhold part of their pay until they meet the performance standard.” If that is the only strategy a manager has to hold people accountable, then I think I need a different manager.
…to be continued.
Here’s to maximizing YOUR profits!
Dr Lisa Lang