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.