Assumptions about the yearly bonus

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Eric Mosley, CEO of Globoforce, writes in HBR.org an article titled: “You’re Getting a Bonus! So Why Aren’t You Motivated?” in which he goes against the idea of a yearly bonus. A short quote:

The problem is that, even if it’s true that contingent compensation spurs higher performance (and not everyone thinks it does – see, for example, this pdf), when the reward comes as one big check cut by the finance department at the end of the fiscal year, that motivating effect is mainly lost. That’s because the bonus fails to make two critical connections: 1.The connection between values and behavior… 2. The connection between a worker and his/her direct supervisor.

True and powerful words. I agree with every word. But I think the problem is even more basic than that.

The problem is in the assumptions underlying this practice. Not only for managers or academics, but for the working people too. We have a culture that worships money. A culture where we believe money, at any point, is the solution. And the more the better.

But it is not. Not in any meaningful way. And certainly not the more the better.

If you ask people what they want – probably money will be the answer. I was talking to an agent about a job the other day. He told me the pay for the position I was applying to is not that good. My answer was, “OK, but other things matter to me, beside the pay”. “Yes, of course” he said. “It is a great company, you get paid on time, there is a yearly bonus and everything”.

What?

If you ask people, theoretically, before hand, what will they prefer, a yearly bonus or some other softer reward and recognition that will make them feel good on a day to day basis they will say – the yearly bonus. People already gave up on the idea of feeling good in their jobs, where they spend most of their lives! And you can show them research and studies and even their own results saying that actually when it comes to happiness, they don’t prefer the yearly bonus. And they still would not believe you.

This myth or habit or whatever you want to call it of the end of year bonus has become so ingrained in the culture that it is treated with religious like reverence. And the problem is that most people believe this story they tell themselves. Until we succeed in changing this almost mythological standing of the yearly cash bonus, it will be hard to bring on change.

Like every fight against habit and beliefs, “victory” would not come from rational argument, but from emotional reasoning. Only when people start to feel the motivation, the passion, the flow, will they be convinced that this practice might seem good and even gives them a short rush, but it actually makes their life miserable in the long-run most of the time. It is a long hard struggle, but it is one, we all want to be fighting.

Elad

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7 Responses to “Assumptions about the yearly bonus”

  1. Ohad Says:

    Elad, good article. I believe that what you are saying is right, but just like you said – it is engraved in the corporate genome to believe that one should work hard for a year and then we should decide if he did a good job rather than continuous feedback and reward. I know it is like that for me. I rarely hear a “job well done” from my direct supervisor.

    This might be interesting to you, if you haven’t already seen it:

  2. sherfelad Says:

    Thanks Ohad,
    Saw the Gilbert talk a while back and was thinking about it when I was writing this thing (or at least about the research behind it)… It is time our generation put a stop to it! are you with me? 🙂
    Elad

  3. Ohad Says:

    Count me in! viva la revolucion!!

  4. Derek Irvine, Globoforce Says:

    We’re with you, Elad! thanks for the feature of Eric’s article.

  5. sherfelad Says:

    Thanks Derek, was happy to write about it. True beliefs should be put out there, that is the only way to bring on change!

  6. ratcfc Says:

    Hi Elad,

    I agree that money is not the only (or perhaps even the most powerful) motivator. It should not be used as the sole carrot to spur productivity, but I think it does have a place in the toolbox. At the very least, however, it does help signal the firm’s/ manager’s priorities. In a strange and contorted way, we can see the power of the bonus on executive behavior in the scandals that periodically gain headlines. My point is that cash can motivate, but you need to be sure it is motivating the right behavior….

  7. sherfelad Says:

    Hey Rishi,
    Good point. I am not saying that cash does not motivate. Or that it should never be used. I am saying that we (workers and companies) need to better understand its limitations and its effects on issues like happiness and motivation both in the short and in the long term.
    Thanks for the comment,
    Elad


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