Posted: September 14th, 2017

Bonuses Can Backfire

Bonuses Can Backfire
Paper instructions:
Read this article first and then answer the following four questions.

It might seem obvious that people will be motivated by bonuses, but many scholars question this premise. Alfie Kohn has long suggested that workers are “punished by rewards” and urges that organizations avoid tying rewards to performance because of the negative consequences that can result. As an alternative to rewards, some experts recommend that managers foster a positive, upbeat work environment in hopes that enthusiasm will translate into motivation.
Although rewards can be motivating, they can reduce employees’ intrinsic interest in the tasks they are doing. Along these lines, Mark Lepper of Stanford University found that children rewarded for drawing with felt-tip pens no longer wished to use the pens at all when rewards were removed, whereas children who were not rewarded for using the pens were eager to use them. Similar ex- periments in which children completed puzzles have also shown that increasing rewards can decrease interest in the rewarded task. Some have questioned the extent to which these results generalize to working adults, but concern about rewards diminishing intrinsic motivation persists.
Rewards can also lead to misbehavior by workers. Psychologist Edward Deci notes, “Once you start making people’s rewards dependent on outcomes rather than be- haviors, the evidence is people will take the shortest route to those outcomes.” Consider factory workers paid purely based on the number of units they produce. Because only quantity is rewarded, workers may neglect qual- ity. Executives rewarded strictly on the basis of quarterly stock price will tend to ignore the long-term profitability
and survival of the firm; they might even engage in ille- gal or unethical behavior to increase their compensation. A review of research on pay-for-performance in medicine found that doctors who were rewarded for treatment out- comes were reluctant to take on the most serious cases, where success was less likely.
Although there might be some problems with providing incentives, the great majority of research cited in this and the previous chapter shows that individuals given rewards for behavior will be more likely to engage in the rewarded behaviors. It is also unlikely that individuals engaged in very boring, repetitive tasks will lose their intrinsic motiva- tion if the task is rewarded, because they never had any intrinsic motivation to begin with. The real issue for man- agers is finding an appropriate way to reward behaviors so desired behavior is increased while less-desired behavior is reduced.

QUESTIONS
1. Do you think that, as a manager, you would use bonuses regularly? Why or why not?
2. Can you think of a time in your own life when being evaluated and rewarded on a specific goal lead you to engage in negative or unproductive behavior?
3. Do you think providing group bonuses instead of individual bonuses would be more effective or less effective? Why or why not?
4. How would you design a bonus/reward program to avoid the problems mentioned in this case?
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