What drives you is the same as what motivates you?
Provocative, yes, but that statement needs an answer in your own silence.
We have long been stretched across the mountainous range of
incentives; the higher the peak the better the result is the dogma. But is that
true?
Behavior Theorists will say yes. They as you know have
confused the issues of Mice and Men. Pavlov’s old ghost that rewarded with a
snack from the correctly recognized trap door vs an electric shock from the
wrong one in mice works to do more harm than good in the short and the long run
both in mice and men. Mice are synaptically hard-wired to reach a certain
destination to receive a reward in forms of food and little else. In men
watching the mice, it accentuates their resolve of incentives to potentially enhance
productivity.
Incentives are both Intrinsic and Extrinsic. The former have
a moral compass attached to them and the latter are more coercive in nature. Or
let us just say the difference is between, “what I want to do, vs. what you
want me to do.” The misguided mind wishes to enforce the extrinsic incentives
to modulate the intrinsic ones and that, time, data and reason suggest is impossible – Edwin Locke
(Ref # 1)
The misguided view of such thought is obvious. Pavlov’s
conditioning is based on avoidance as much as it is in survival. The human kind
mistakes that as increase in productivity causal through rewards. Our
weaknesses are revealed under the uncompromising high altitude truths and there
we find; rewards that feed desires quickly cause the hunger of understanding to
flame out faster and with that exploration and innovation.
What good do incentives do then? Here are a few answers you
will hear from the managers who have grown up with the “If this then that”
concept of the American way of life.
1. 1. Productivity goes up! Does it? The answer in the
short term is it does but then as more productivity is needed to keep the
incentive, the quality goes south. The initial incentive creates a temporary
phenomenon which fades quickly forcing the manager to go back for more and more
of the manna. The classic fallacy that follows is; the initial hypothesis is
correct and therefore more incentivizing is needed. The spiraling structure
rides the next turn of the screw. Ultimately the train of thought has to reach a
destination and it does when the cost per widget equals the profit from that
widget and demand equals supply. To the manager who benefits from incentive
programs because of his own bonus tied to it, it is always a “self-fulfilling prophecy,” when things go bad from
good and he chimes his new incentive program as the panacea for success.
2. 2. It motivates the producer. Does it? Temporarily,
but it also creates a window of discontent from the others in the field who are
without the incentives and feel inferior or “left out.” This particular cycle
ends viciously in employee rivalry and competing for the finite pool of
incentives thus leading to short cuts and loss of real productivity in the
intermediate and long term. It is demoralizing to the ones who do not receive
the incentives to continue with their daily workload with the same enthusiasm.
3. 3. It benefits the manager. Yes that it does!
Mimi and Eunice
What bad do incentives do? Plenty!
1. 1. Incentives do not lead to an enduring commitment
to any action or any program. Rewards have a similar effect on the human
behavior as punishment and both in the end from the individual’s perspective
feel like manipulation.
2. 2. Individual gain becomes the name of the game.
Call it the Agency problem where the incentivized motivated manager cares only
for the short term solution for a long term issue. Example a CEO/CFO who for the
sake of a large bonus has to show a rising Stock Price to gain the appropriate stock
shares as bonus reward for his actions. His actions might consist of reducing
the labor force to reduce expense and thus increase the net income during a
decrease in revenue, or he might consider increasing the debt (to offset income
tax) and use the debt to buy-back the shares to enhance share value or he might
sell a long term promising project for a short term windfall to shore up the assets and the share value through buy-back or report financial problems within the company in
arcane hidden parts of the financial reports as “Special Purpose Entities” used
by Arthur Anderson, the auditing firm in the classic case of Enron, where
realized losses were hidden.
3. 3. Incentives destroy exploration of causality in
dwindling productivity and try to fix it with rewards.
4. 4. Incentives are thieves of individual intrinsic
motivation and desire.
5. 5. Extrinsic Incentives reduce innovation. (Ref #s 2-5)
Nowhere is there a better example
of such promotion of behavioral reward followed by punitive action more visible
than in the field of medicine. The CMS
Authority has burdened the physicians with miniscule rewards and heavy
penalties to attempt to change physician behavior. The long held Damocles Sword
over the physicians called the SGR (Sustainable Growth Rate) formula to pay
physicians that kept hinting at a 21% cut in reimbursements was repealed and
instead a worse APM (Alternate Payment Model) was adopted that gives the CMS
sweeping powers for draconian reduction in payments to physician from the 7
cents per dollar paid to them of the total healthcare costs. The 7 cents are under the most glaring of scrutiny than any in any kind of vocation. Meanwhile the healthcare
managers with 5-6 times the average salary of physician, continue to reap the rewards from the Agency Problem by creating surreptitious
models that point fingers of blame at the physicians for the escalating healthcare
costs. Another example, for instance in this game of sham is the 0.5% reward
for following a directive (“Meaningful Use” of EMRs) otherwise a 2% penalty.
Likewise promoting ACOs to cut costs through “Less is More” policy saved the
CMS over $400 million and rewarded the ACOs with less than 1/10th in
return. As the “Pioneer ACO” program fall out shows several of the ACOs
disbanded due to belief that such dire cost cutting was leading to poor patient
practices and hurting their chances of surviving financially in providing care
to their communities.
More recently however the Insuring
forces are incentivizing the use of poorly designed pseudo-scientific data to
enforce limited screening of diseases like cancer.
Punitive actions are like their twin
sister incentives, neither present a
long term viable behavioral modification. They actually lead to demoralization,
as Robert W. Baird and Co., Inc., wrote in the 1985 book, Intrinsic Motivation and Self-Determination
in Human Behavior, “the research has consistently shown that
any contingent payment system tends to undermine intrinsic motivation.” The
basic effect is the same for a variety of rewards and tasks, although extrinsic
motivators are particularly destructive when tied to interesting or complicated
tasks.” Incentives like punitive actions perversely affect human behavior;
opportunity for exploration, improvement of self, advancing of one’s self
image, achieving personal goals and renders obsolete intrinsic motivation."
The last question that remains is,
“Do incentives motivate passion?”
The answer is NOT, as Jonathan Friedman
of University of Toronto stated simply, “If they have to bribe me to do it, it
must be something I wouldn’t want to do.” So it comes to this final conclusion
should anyone care to listen: You cannot force
passion into a mind that is closed to it, with rewards! Incentives squelch innovation and real growth.
REFERENCES:
1. “Financial Incentives” G. Douglas Jenkins,
Jr. in Generalizing from Laboratory to Field Settings, edited by
Edwin A. Locke (Lexington, MA: Lexington Books, 1986.
2.
“Intrinsic
and Extrinsic Motivational Orientations: Reward-Induced Changes in Preference
for Complexity” Thane S. Pittman, Jolee Emery, and Ann K. Boggiano (Journal
of Personality and Social Psychology March 1982).
3.
“Enemies of Exploration: Self-Initiated Versus
Other-Initiated Learning,” John Condry (Journal of Personality and
Social Psychology July 1977).
4.
“Toward a Theory of Task Motivation and
Incentives” Edwin A. Locke (Organizational Behavior and Human Performance Volume
3, 1968).
5.
Intrinsic Motivation and Self-Determination in
Human Behavior, Edward L. Deci and Richard M. Ryan (New York: Plenum Press,
1985).
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