HBS Article: Sins of Commission, Be Careful What You Pay For …

Companies often seek quick fixes to increasing employee performance and one such quick fix is “pay for performance.”  The concept sounds good, however the incentive rules may actually drive unwanted behavior.  For example, paying someone a flat fee for completing work may lead to sloppy results.

One of the reasons the desired behavior is not observed with various motivational strategies is that the desired behavior is not well-defined.  In the case of paying a flat fee for work, there needs to be quality standards that define acceptable results.  In this case, the work is not done until the quality standards are met.

The lesson here is that there is no quick fix.  Money is a good motivator and so are many other factors and it is very difficult to find cause and effect between motivational factors and behavior.  With Men’s Warehouse, money was only one of the motivators and it was used as a recognition tool rather than compensation.  Other factors included old fashioned celebration of success and other non-money rewards.

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Explore posts in the same categories: BADM 720 - Organizational Behavior

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