Using Money to Motivate Creates More Problems Than Benefits

Comments on: Employee Motivation and Lean Implementation – Part 2: Money

Well said. Nearly all "motivation" efforts such as bonuses create far more problems than benefits. Paying people fairly is important, if they don't have enough to live they will be distracted and seeking new options.

And if they are substantially underpaid compared to the market (even if they have enough to live comfortably) they will be prone to seek new alternatives and be disgruntled because they feel they are being treated unfairly.

The best "motivation" managers can provide is to eliminate the de-motivation created by poor practices in the management system.

Sadly these are often common and managers can keep themselves very busy just doing this. If not, they are likely very lucky and probably have no motivation problems to worry about.

Related: Why Extrinsic Motivation Fails - The Defect Black Market - Dangers of Extrinsic Motivation - Extrinsic Incentives Kill Creativity - A "Demotivated" Workforce is a Symptom of the Culture of the Organization - The Potential Benefits, Risks and Folly of Stretch Goals

The damage caused by "Management" by targets is much larger in dysfunctional organizations

The damage caused by "Management" by targets is much larger in dysfunctional organizations - they are also more likely to be given more importance by dysfunctional organizations, that is a bad combination. In a great organization with an strong understanding of systems, respect for people, no pay based on "performance," an understanding of data and variation... then damage managing by targets does is much smaller. But the number of those organizations is not huge.

Reaction to: Target Setting, Cause and Effect

Related: Setting Goals Can Easily Backfire - I achieved my goal by not my aim - Be Careful What You Measure - Targets Distorting the System

Setting Goals Can Easily Backfire

Response to: Goal-Setting is as Easy as 1+3

Aligning actions with strategic goals is key. And frankly this rarely happens. It is great when it does but it takes a much more systemic approach than just goal setting. Without a systemic focus on evidence based management goals often end up having people just focus on numerical targets whatever that results in for the rest of the business:

  The Trouble with Incentives: They Work
  Deming on the problems with targets or goals
  “I achieved my goal by not my aim. That happens a lot, we honestly translate aims to goals. And then we do stupid things in the name of the goal get it the way of the aim. We forget the aim sometimes and put the goal in its place.” - nice story (webcast) from Mike Tveite

It doesn't have to do so. It just does, quite frequently in many organizations. A culture that understands variation, thinks systemically and uses evidence based systemic measures of progress helps make sure the dangers are avoided. But that understanding is missing in most places that use goals.

Without that you should spend at least as much time worrying about the dangers the goals you are setting will pose and put in counter-measures to try and deal with them as you do on the rest of the effort around goals.

How to improve results: good process improvement practices.