Individuals- Motivation, Decision Making, and Emotions

        I never viewed receiving incentives or bonuses on your job as a bad thing.  It was always considered a reward, or the rationale behind working in the first place.  People work to get paid, and to provide themselves with a comfortable lifestyle.  As I began to read through Pfeffer and Sutton’s Chapter 5: Do Financial Incentives Drive Company Performance, I discovered that incentives can cause more harm than good.  Giving employees incentives does not necessarily improve their work performance.  Pfeffer and Sutton discussethe difference between motivation and effort.

“Incentives are seen as the primary tool for aligning individual behavior with organizational objectives, because without effective incentives people would do nothing… or if they did expand effort, people are presumed to be almost certain to do things that undermine the organization or management goals.  Motivation is the most important factor affecting individual task performance, financial incentives are the most important of all motivators” (Pfeffer & Suttons 2006, p110).

I agree with Pfeffer and Sutton’s explanation behind why companies give incentives.  I have always been told: the harder one works, the benefits shall flow in.  Meaning, the benefits are a higher position or an increase of income.  The decisions that are made along the way to become more successful are viewed as a reflection of one’s character.  Will I cheat my way to the top?  Will I just work hard and honest?  When the level of desired success is reached, will I continue to work hard?  Everyone has potentially been faced with these questions in the work place.  Decision making is a part of human nature that is complex and often misunderstood. 

            In my last restaurant experience, raises were offered every six months.  An evaluation of your overall six-month performance was on a scale from one to fifty.  The mangers were responsible for giving your score and tallying up your total, which means they were in control of your raise.  No matter how hard you think you worked, the final decision was left up to the mangers.  So, what was disguised as a raise/incentive was really a six-month judgment meeting.  Often times, I saw my coworkers come out of the evaluation discouraged and feeling not appreciated by the restaurant.  This ultimately caused friction with their job performance.  Because they did not get the raise they expected, this left them with the lack of acknowledgements from the mangers for their efforts.  This a great example of incentives gone wrong.

photocredit: www.primeum.com

        Another concept that Pfeffer and Sutton explained on is the mayonnaise theory on page 125 under Variable Pay=Pay Dispersion=Lower Performance.  The mayonnaise theory is defined as: raises that are spread rather equally and thinly across the entire employee base, and instead, of give bigger rewards to employees that contribute most to the organizational performance (Pfeffer & Sutton 2006, p125).  I agree with Pfeffer and Sutton with realities on using this particular theory, and the problems it raises.  This theory portrays to employees that no matter how hard one works, it will never lead to a pay increase.  However, recognizing employees  that only contribute the most to the company could cause what Pfeffter and Sutton refer to as “self-enhancement effort” (Pfeffer & Sutton 2006, p126).  The self-enhancement efforts are the desires of people to think more positive about themselves (Pfeffer & Sutton 2006, p126).  These lines of behavior are seen in employees who think they are superior to their fellow coworkers.  So, if dispersing equal income is not the answer then how are financial pay plans constructed?  Applying the mayonnaise theory financial payment is ineffective and can cause a chain of wrong reactions.  Developing a financial payment plan that ensures employees their work is appreciated while creating a better working environment for them to thrive in is the end goal that most employers should aim for.  Employers should use better decision making to ensure employees are taken care of mentally not just financially. 

          The Problem with Profit Sharing by Jack Stack This article explains the difference between profit sharing and a good bonus program.  According to the article, profit sharing is taking a percentage of the company’s profit and distributing it to the company’s employees.   As a result, employees become dependent on the regular scheduled bonus/incentive.  This strategy of “rewarding” could turn into an entitlement program instead of a reward program.  Employees will start to feel entitled to receive an incentive.  If the companies are not providing the necessary feedback, then the employees will not understand on how to improve upon their work.  This concept crimples the employees on becoming better at their job.  I agree that profit sharing does not provide an adequate outcome.  Stack noted that the CEO explanation behind the article was the foundation of the source.  The CEO argues that good structural bonus program are more efficient than profit sharing.  The mission behind a bonus program is to make a company stronger and more competitive.  A good bonus program is focused around educating their employees.  By doing so, they are really a part of an improving and growing company.  The CEO views align with Pfeffer and Sutton’s explanation on how employees are not just motivated by money.  They are motivated by personal goals of wanting to achieve their best for the company.  As mentioned in the article, “There is no greater motivator in the world than an opportunity to make a difference.”  Furthermore, the CEO explains that it’s the way the companies advertise their bonus programs.  Highlighting the experience that is gained from improving the company instead of the financial value is a good way to show that the companies cares about their employees.  Profit should not be the goal but teambuilding, atmosphere improvement, customer care, and the quality care of employees should be the ultimate goal behind incentives on the job.

            In the near the future, when I am in a management position, I will recall all of these different management concepts when it comes to motivating my employees.  Hopefully I will make logical decisions with the betterment of the employees in mind.  Mistakes will be made and lessons will be learned.  The next session is about Team, Communication, and Leadership.  I would like to learn how to communicate with people more professionally.