The problem with incentives

Human resources are usually facing two challenges : increasing the productivity and keeping their good employees.

These two problems are in my mind related to each other. You need to hire the good employees, keep them motivated and productive. Different companies, different industries have different ways to try to achieve just that. It’s increasingly difficult to keep your employees and team members motivated, so a solution that seems quite simple to implement is to create an incentive program, giving sums of money to employees according to objectives. This solution is so simple that we should be careful and check the real efficiency of such method. In fact, several example [1] show that this method is prone to deviation, cheating and other false report. The incentive doesn’t improve the productivity but increase the chances for a person to cheat [2].

For instance, if you give software developers a bonus per bug corrected, you may end up with developers putting the bugs in the source code in the first place.

So what is the correct method, the one that improves productivity, and keep the employees motivated ? I don’t think it’s money, I think it’s more personal than that. To truly motivate someone you need to listen to the real interest of this person. In fact you don’t motivate people by giving them money but by listening to them.

References :

[1] http://bobsutton.typepad.com/my_weblog/2011/07/new-york-city-halts-teacher-bonus-program-another-blow-to-evidence-resistant-ideology-.html

[2] http://bobsutton.typepad.com/my_weblog/2010/06/winner-take-all-incentives-and-cheating.html