Management And Accounting Web

Kohn, A. 1993. Why incentive plans cannot work. Harvard Business Review (September-October): 54-63.

Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Behavioral Issues Main Page | Deming Main Page

This is a relatively short paper adapted from a book by Kohn, Punished By Rewards: The Trouble with Gold Stars, Incentive Plans, A's, Praise, and Other Bribes originally published in 1993. In this paper Kohn provides six reasons for the failure of reward systems based on what he refers to as a growing collection of evidence. Rewards succeed in obtaining temporary compliance, but fail in creating an enduring commitment to any value or action. The reasons rewards fail in the long run are as follows:

1. Pay is not a motivator. There is no firm basis for the assumption that more pay encourages people to do better work, or in the long run, to do more work.

2. Rewards punish. Withholding rewards from those who had hoped to receive them is indistinguishable from being punished. The more desirable the reward, the more demoralizing the effect when it is withheld.

3. Rewards destroy cooperation. Forcing people to compete for rewards causes them to see each other as obstacles to their own success.

4. Rewards ignore the reasons for problems and the possible causes of improvement. Reward systems require less effort on the part of management, but are poor substitutes for good management and even impedes the ability of managers to manage.

5. Rewards discourage creativity and risk-taking. Rewards motivate people to get rewards, but the emphasis is on the reward rather than the work to be done. Rewards, at times, encourage people to manipulate the numbers and even engage in unethical and illegal behavior.

6. Rewards undermine interest in work. People who do exceptional work do it because they love what they do. Extrinsic motivators are poor substitutes for intrinsic motivation, i.e., for promoting a genuine interest in one's work. Incentives, or bribes cause people to feel negatively about the work they are being bribed to do. A Skinnerian management compensation system is a self-fulfilling prophecy.

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