Barring those sales positions where you create your own
small business under the umbrella of a large firm such as
an insurance broker, pay for performance can have
significant negative consequences for your organization.
Pay for performance is part of that management philosophy
that believes that extrinsic rewards (e.g., money) are the
things that largely drive the behavior of people.
This philosophy is part of the old “Carrot & Stick”
approach to human motivation, which states, “If you want
people to perform better you reward them with bonuses,
HR CONTRARIAN POINTER: If we want to improve the financial
and operational performance of our companies, the solution
is not to entice people with a bigger carrot or poke them
with a sharper stick. We need to re-look at intrinsic
Intrinsic rewards include the desire to do things because
they matter, we like doing them, they are interesting, or
they make us feel part of something important.
If you want compliance, traditional management with
“carrots & sticks” may work better. If you want employee
engagement, then you need to take a long look at intrinsic
rewards and the value of self-directed work.