Tuesday, May 29, 2007

Bonuses considered harmful

Did I nod off or something? The meeting had started out well enough, a mind-numbing Powerpoint talking about the methodically developed rewards structure and how there were professionals with years of experience deploying this very bonus structure to Fortune Yadda Yadda companies but the presentation over, people started asking questions, and that's where things started going hella bad.
The company I work for started out its life as a start-up and was eventually bought out by a much larger company. When the corporation's new management came in, they gave us the feel-good bill of goods: you're the best of the best, entrepreneurial spirit, turn on a dime, yadda yadda.
But the honeymoon had to end sooner or later and this wasn't getting pretty, for one big reason - people had counted on the fact that we were, after all, the best of the best, and this naturally meant that when it came time for the annual bonuses and raises, they were going to make bank. Except now, the ugly reality was setting in - deadlines we had no say in defining had been blown and there had to be repercussions. Oh, and you're already being paid over market value, so don't hold your breath on that raise either.
Nobody's buying it. The mood's getting palpably hostile.
Reiteration. This works for big companies and my hands are tied.
Some people resigned themselves to reality, others just... resigned.

So I've seen what can go wrong when you dangle the carrot in front of people. But for myself, I just don't care about the carrot. I was excited when I got a big raise a few years back, but I've been given bonuses multiple times since and have been completely unenthused by them.
I must be an insane person, right? I live in a capatalist/consumerist society; I should love money and being given more of it should make me excited, right?
After all, when you get down to it, I'm just a developer. I took a couple of management classes in college (I promptly forgot everything except for the goofy terminology like ROI and core competency and other bits and pieces I sprinkle liberally when I'm being a dick) so what do I know about bonuses? Very smart people came up with the bonus structure and everyone understands the stick and the carrot so I must be an aberration.
Except for the fact that, thank god, I'm not the only person that thinks this way. Alfie Kohn's written books challenging conventional wisdom on bonuses and strict management structure, and there's a few of his papers up on his internets site.
Go read his papers and you'll find the same theme repeating itself - bonuses (or, in way-smarter-than-me parlance, "extrinsic inducements") have been proven time and time again to fail to work. At best, you get an initial boost, but given a little time, the problems that bonuses create (making co-workers adversaries rather than, well, co-workers by breeding feelings of resentment to name one) quickly outweigh any of the quick-fix wins that you may have realized from them.

That rewards can't get us what we want is a heretical idea, but it emerges ineluctably from a critical analysis of motivation and work.
- Alfie Kohn, Challenging Behaviorist Dogma

About two dozen studies from the field of social psychology conclusively show that people who expect to receive a reward do not perform as well as those who expect nothing. This result, which holds for all sorts of rewards, people and tasks, is most dramatic when creativity is involved.
- Alfie Kohn, For Best Results, Forget the Bonus
Still not buying it? Let me try the metaphor that came to me when I was out cycling.
Why was I so much happier to get a cheap-o t-shirt with some of the in-jokey slogans celebrating the release of our product than I was to get thousands of dollars of bonuses?
Growing up, I had two hypothetical Aunts, Annie and Betty. Every year for my birthday, Aunt Annie gave me a little toy. Every year, Aunt Betty gave me a crisp twenty dollar bill.
Whose present would you look forward to and appreciate more - the one that shows that she's spent time figuring out what a kid your age would want or the one that shows that she's got a wallet and maybe an iron?

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