Ernie Capobianco, CEO, Sq1, a digital conversion optimization agency.
The general accepted or dominant attitude about bonus plans is that they can serve as a source of motivation and incentive to increase productivity and performance of efficient employees.
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Why is this so? Because it has been a time honored tradition. And as such, its effectiveness has not often been questioned or analyzed.
But as he sometimes does the trick, there is a dark side to this financial carrot that can be deposited over a monkey wrench in the works. Bonus plans can actually have a negative effect that destroys morale, decreased productivity, creates discord and pushes quality people at the door.
It is true that the bonus plans may have a short-term lift in productivity, there is a lack decided evidence to prove the effects are lasting. In fact, premiums have been shown to promote conflict in the workplace.
Such a problem is that bonuses encourage such a competitive environment that stifles collaboration and encourages a sort of Machiavellian attitude that favors do what it takes to get the bonus, regardless of its impact . And that could be to the detriment of what is in the best interest of the company or that of his colleagues.
Another inequality is often a bonus schemes downside are the parameters that determine who gets a bonus, and that has not: Are they easy to measure? Are they fair? And will they create disputes?
Finally, premiums may serve as a disincentive to those who earn them, as they may feel their contribution is less valued in society. There is no quicker way to destroy the morale of the team by granting a bonus to some but not to others.
short-term gain, long term pain
Yes, it is true that the financial incentives can boost productivity in the short term, but in the end moral of the enterprise will suffer. The reason? People in general will use the bonus as the main engine to do their job and do not see their work as an end in itself. They become addicted to the pace of getting a bonus and job satisfaction suffers.
Finally, as a result of employees believe that their current compensation is not enough to justify the extra effort - and if premiums can not be paid - they return to a lower level of productivity than before because they realize they are not going to get a bonus.
The fair of all in love and war, but not in the bonus
You can almost bet that any incentive scheme you come up with rewarding people for competence and performance shall be considered unfair by some urgency to your workforce.
Indeed, factors such as the parameters used to measure the results tend to be subjective and are affected by many factors, which can skew the results. And the net result is instead of motivating employees, subjective premiums reproduce an atmosphere of resentment toward management and co-workers, who denies any advantage of the incentive program is supposed to have.
Another variable that could create dissension in the workplace is the subjectivity inherent in the perception counts Plans plans. Employees can compare their basic wage rate so that it is considered a relatively objective standard market; Employees can also get an idea of whether they are paid fairly.
Incentives are a different story altogether, though, that someone in the company is likely to feel like he or she becomes the tree because attaching a monetary value to a behavior is subjective.
In addition, the pressure of the market, management decisions and other independent variables of the willingness of employees can make them feel as if the bonus is beyond their reach.
Employees tend to see the bonus as expected if they receive year after year. They are hung on him and come to rely on it as part of their compensation.
If the company has several bad quarters, the economy suffers a recession, or any other reason, and bonuses are cut, employees will probably not friendly. They perceive the situation as unfair and the fault of society. And worse, can look the company not to deliver on their "promise" and bolt.
There are even studies that suggest incentive cuts create an immediate negative effect on sales and morale, and over time, it can cause companies to lose their top performers.
The good, the bad and the ugly of bonus
The theory behind incentive compensation is money that motivates employees to perform well. Unfortunately, in many cases, employees are angry with the company because their own expectations for bonuses are not met. Morale was injured when employees work hard all year, but the profits of the company still lags behind.
If incentive comes in the form of profit sharing, where everyone gets their "piece of the pie", it can be a nice perk that attracts potential employees to the company and helps retain the existing staff.
On the other hand, if it is something like a "best seller of the month," it could have a negative effect, because it is so difficult to measure objectively.
Create a positive net environmental positive
the key here is that you can not buy professionalism. you should not pay for additional staff to do their job.
good employees are those that do a good job without any financial incentive If you treat your employees with respect, make them feel appreciated by the praise and recognition. you happy, motivated employees not throwing money at them with. bonus.
Create a work environment conducive to doing good work and you will reap more rewards than throwing money to employees. Foster, not collaborative and competitive environment you will have employees who look colleagues as team members not their competitors. And set business goals that they will be proud of the achievement rather than using bribes or throwing money at them.
Awards and Recognition: The key to motivate your employees
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