Free Why Incentive Plans Cannot Work Essay Sample

Although the extent to which managers and their advisers consider rewards as redemptive is difficult to substantiate, a majority of corporations in United States have devised and implemented programs that are intended to facilitate employee motivation. An example of these programs includes individuals’ compensation based on a certain performance index. Nevertheless, for a long time, it had been believed that whenever the management of a certain corporation promises its employees some incentives, their performance would improve dramatically. In reality, this is not always the case, and since these incentive programs are based on the findings of the laboratory work on behaviorist theory, their consistence wit facts on the ground may be doubtful. The management should therefore avoid overreliance on guesswork, and base their planning on tried and tested motivational factors in order to lower the possibility of failure. Indeed, promises are at times counterproductive, especially when the management fails to keep its word. This is because; such a scenario leads to discontent and resentment amongst the employees who may then contemplate sabotaging the firm’s operations. Despite this risk, the assumption that promises deliver better results persists.

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My opinion is that these conclusions are erroneous because most analysis of work settings as well as studies has indicated that at times, rewards undermine the team spirit in an organization. This happens as a result of individuals’ resentment whenever a coworker is singled out for an outstanding performance that many feel resulted from teamwork. The implication is that in a cooperative engagement, there are numerous challenges in identifying the roles to be rewarded. Additionally, in situations where resources for funding incentive programs are inadequate, the employees’ performance may be hurt. Therefore, in order to fulfill the pledges, the management needs to make realistic budgetary allocations in advance. Moreover, it is necessary for the management to reduce the complexity of incentive program being applied. This can be achieved by having distinctly defined objectives that every participant is aware of.

Managements have been devising varying methods of computing bonuses in an endeavor to prompt better employees’ performance. However, these methods do not have universal applicability, and its good management practice to consider each case individually. Nevertheless, modes of incentives include monetary compensation, banquets, and vacations. Many consultants argue that the management needs to be forward thinking so as to promote stakeholders participation, sustained improvement, and team work. They further maintain that when properly instituted, incentives go a long way in maintaining reforms because, money has for long been identified as the biggest motivator. On their part, critics of the incentive plans argue that their calculations as well as delivery need to be fine-tuned for effective solution to motivation challenges. According to Professor Herbert Meyer of the College of Social and Behavioral Sciences at the University of South Florida, this critical view hasn’t changed.  He asserts that unless they are improved, the effectiveness of incentive plans will remain challenging, and at times doubtful.

Several research findings have indicated that, in most cases, rewards only gives rise to temporary compliance. According to these findings, lasting changes in employees’ conduct and attitude cannot be entrusted on rewards. In such circumstances, rewards, just like punishment, have proved ineffective because as individuals get used to them, motivation wanes. Related studies have indicated that behavioral changes such as using seat belts, quitting smoking, avoiding sugary foods, and acting generously are rarely shaped by inducements. In fact, offering incentives have occasionally been noted to result to outcomes that are by far inferior to in the period prior their application. This is because psychologically, extrinsic motivators like incentives rarely alter the attitude that forms the basis of human behavior. The motivators influence our conduct in a short-run without creating enduring commitments to systems of values that guide action.

On productivity, over two dozen analyses have indicated that, whenever employees work with an expectation of receiving rewards upon successful completion of tasks, their productivity measures below that of those who work with no expectations at all. To arrive at this conclusion, studies were conducted on individual of various age groups as well as sexes. The tasks under evaluation included designing collages; memorization of facts; and critical and creative thinking during a problem solving process. The general observation was that the more sophisticated a scenario was, the worse individuals performed while working with the aim of being rewarded. This is because cognitive situations requires open ended reasoning, while rewarding destructs abstract thoughts as a person’s conception is focused a narrow line of thinking. The findings were unprecedented, and previously, researchers had an assumption that extrinsic motivators produce better results.

According to Douglas Jenkins, most organization studies tend to lay their focus on varying incentive conditions, despite being intended to measure the effect of performance-based remuneration on the levels of performance. Nevertheless, several studies have been designed to examine whether the level of payment, particularly to the executives, bear relation to an enterprise profitability as well as the other organizational performance measurements. In most instances, there are slight and, at times, negative correlation between performance and pay. The low correlativity indicates that the links between incentives and performance are weak, and extra inducements as well as higher salaries do not necessarily lead to enhanced performance. In 1982, a study by John A. Larson and Jude T. Rich that was based on proxy statements and interviews evaluated compensation formulas being rolled out by 90 American corporations. They sought to determine if shareholders’ returns were better with corporations which rewarded top executives as opposed to those which did not. In the end, they found no significant difference.

Numerous reasons that lead to the failure of incentive programs have been documented. Although these reasons show similarity with several organizations, every situation is unique, which means that ascertaining success does not call for duplication of rewarding schemes. Nevertheless, some of the most recurring reasons include the impact of external factors, insufficient stakeholders’ training, inadequate rewarding, absence of progress reports, and inferior evaluation. To avoid demoralizing employees, the management should institute formulas that avoid the chances of penalizing an individual due to effects of unforeseen circumstances. These circumstances may include when inadequate logistics lead to ineffectuality of an employee’s performance. When such a scenario occurs, the management should have a mechanism that waiver an employee from penalty since failure would be beyond his/her control. Comprehensive training of stakeholders is important to avoid causing disarray amongst the staff of an organization. With good knowledge regarding the incentive program being rolled out, everyone makes an informed decision, and this assures the future growth of an organization. In order to minimize resentment, rewards should matchup with achievement. If this is disregarded, employees may feel cheated, a situation which may make them downhearted and discouraged.  This may, in the end, further damage the employees’ performance, and make the incentive appear as the main factor that constituted failure.  As regular feedback assists the management in the evaluation of progress, it also motivates average performers to maintain a positive momentum. Unavailability of feedback may disorient workers because as they may have little idea of their current performance pertaining a task. Upon the completion of the program duration, the management should fully evaluate the enterprise’s objectives with an aim of establishing their success rate. This would help refine and improve performance such that steady returns on investments are maintained.


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