3 ms·

Incentives don't work. This has been documented over and over again, and it's truly puzzling that large corporations don't learn from it. Here's a quick and li

by mixmax 17y ago

Incentives don't work. This has been documented over and over again, and it's truly puzzling that large corporations don't learn from it. Here's a quick and light article on the subject: http://www.joelonsoftware.com/articles/fog0000000070.html http://www.joelonsoftware.com/articles/fog0000000070.html Here's a video lecture on the subject: http://www.youtube.com/watch?v=FdkQwQQWX9Q http://www.youtube.com/watch?v=FdkQwQQWX9Q And here's the classical Harvard business review article that originally proposed it: http://cb.hbsp.harvard.edu/cb/web/product_detail.seam;jsessionid=F70EF90E20FF356FBD77BC18BC48618D?R=93506-PDF-ENG&conversationId=382686&E=59880 http://cb.hbsp.harvard.edu/cb/web/product_detail.seam;jsessi...

gaius 17y ago
Incentives don't work. Given the choice of doing exactly the same work for company A that believes that and company B that pays bonuses anyway, what sane person wouldn't go for B? That's not puzzling at all.
- jimbokun 17y ago
  You still can deliver bonuses to an entire team, group, or entire company, that are not dependent on individual performance.
  - eru 17y ago
    Or just increase the base salary.
- mixmax 17y ago
  Research on the subject seems to contradict you. There are several problems - Incentives are very hard to get right. If your bonus is tied to sales you inflate sales and don't care about margins. If your bonus is tied to margins you oversell and someone else suffers in aftersales support. If your bonus is tied to stockprice you do what you can to inflate the stockprice, hoping everything won't come crashing down before you receive your bonus. And so on. - When it comes to it very few people are driven by money. They'll say they are but in reality they aren't. Would you knowingly sell something expensive to an old lady who can't afford it that she doesn't need in order to make a sell and get your bonus? Most people wouldn't. - Incentives drive you to only care about the incentive for which you're awarded. If you're in one department and can make $10 knowing that another department will lose $100 that's what you'll do. Besides very few choices in life, if any, are as black and white as you put them.
  - gaius 17y ago
    When it comes to it very few people are driven by money No economist believes that they are. People are motivated by a concept called "utility" which is, money, a nice office, interesting colleagues, meaningful work, a short commute, opportunity to assert authority, and other factors. The exact mix will vary from person to person, but the money is important: it often determines quality of life outside of work. All other things being equal, people will join the company that will maximize this, or appears to at hiring decision time. If one company has, even on paper, profit sharing/bonuses/stock options/whatever, and its rival doesn't, who's going to get the pick of the talent?
barrkel 17y ago
Incentives slice both ways. I know I personally have not done some things in work that I could have done, because I would not have captured a large enough slice of the value created.

by mixmax 17y ago

gaius 17y ago

Incentives don't work. Given the choice of doing exactly the same work for company A that believes that and company B that pays bonuses anyway, what sane person wouldn't go for B? That's not puzzling at all.

jimbokun 17y ago
You still can deliver bonuses to an entire team, group, or entire company, that are not dependent on individual performance.
- eru 17y ago
  Or just increase the base salary.
mixmax 17y ago
Research on the subject seems to contradict you. There are several problems - Incentives are very hard to get right. If your bonus is tied to sales you inflate sales and don't care about margins. If your bonus is tied to margins you oversell and someone else suffers in aftersales support. If your bonus is tied to stockprice you do what you can to inflate the stockprice, hoping everything won't come crashing down before you receive your bonus. And so on. - When it comes to it very few people are driven by money. They'll say they are but in reality they aren't. Would you knowingly sell something expensive to an old lady who can't afford it that she doesn't need in order to make a sell and get your bonus? Most people wouldn't. - Incentives drive you to only care about the incentive for which you're awarded. If you're in one department and can make $10 knowing that another department will lose $100 that's what you'll do. Besides very few choices in life, if any, are as black and white as you put them.
- gaius 17y ago
  When it comes to it very few people are driven by money No economist believes that they are. People are motivated by a concept called "utility" which is, money, a nice office, interesting colleagues, meaningful work, a short commute, opportunity to assert authority, and other factors. The exact mix will vary from person to person, but the money is important: it often determines quality of life outside of work. All other things being equal, people will join the company that will maximize this, or appears to at hiring decision time. If one company has, even on paper, profit sharing/bonuses/stock options/whatever, and its rival doesn't, who's going to get the pick of the talent?

barrkel 17y ago

Incentives slice both ways. I know I personally have not done some things in work that I could have done, because I would not have captured a large enough slice of the value created.