Motivation, Bonuses and Key Performance Indicators

I have posted a few times about the “management by measurement” culture and how destructive it can be. This TED video by Daniel Pink adds some color to the conversation.

Simply put, while traditional “incentives” tend to work well when the task is rote and the solution is well understood, applying those same incentives to situations where creativity is required will reduce people’s performance.

We saw this in Ted Wujec’s Marshmallow Challenge video as well, where an incentive reduced the success rate of the teams to zero.

This time of year companies are typically reviewing their performance and setting goals and targets for next year.

It is important to keep in mind that there is overwhelming evidence that tying bonuses to key performance indicators is the a reliable way to reduce the performance of the company.

2 Replies to “Motivation, Bonuses and Key Performance Indicators”

  1. Overwhelmed by “Ted’s” I think… This is Daniel Pink, not Ted Pink. 🙂 [fixed – thanks. mr]

    Fascinating topic and I highly recommend his book “Drive”. It is SOOO difficult to work with monetary incentives. The biggest problem I see is that they already exist. If you have read “First Break all the Rules” you will know that money is NOT a motivator but the lack of money is a huge de-motivator. So what should a company do when people have bonuses based upon performance already?

    If you take the bonuses away it WILL de-motivate people. But setting the bonuses eliminates creativity. Which is worse?

    1. Honestly, I don’t see bonuses based on the success of the enterprise as a whole being the same thing.
      What gets toxic, IMO, is when they are directly linked to tasks, KPIs, etc.
      I would point out, also, that W. Edwards Deming gave us the same message decades ago.

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