The Problem With Financial Incentives

“Bonuses and stock options often improve performance.  But
they can also lead to unethical behavior, fuel turnover
and foster envy and discontent.”  This quote is taken from
an article by Wharton professors Adam Grant and Jitendra
Singh titled “The Problem With Financial Incentives – and
What to Do About It.”

In their article, the professors argue that it is time to
rethink “money as a motivator” and begin paying attention
to intrinsic factors of work.

HR POINTER: If the underlying organizational culture is
driven by monetary rewards, the company will tend to
attract more “me first” individuals and fewer team
players.

Professors Grant and Singh are not suggesting that
companies abandon financial incentives.  However, they are
suggesting that companies need to carefully construct
extrinsic and intrinsic rewards to avoid discontent and
promote a culture of “team first.”

Click this link below to view the entire article:
http://knowledge.wharton.upenn.edu/article/2741.cfm

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One Response to The Problem With Financial Incentives

  1. The article is right on target with the adverse consequences of extrinsic reward systems. The level of unintended unethical behavior may surprise the average person; however, many members of the corporate club just roll their eyes when they read the articles recommending reform. Unfortunately, the MBA programs are just beginning to address this matter and the good old boy network still in place, just want to get their piece of the pie before any radical attention is given to the problem. Just read the news and as recently as this past week the financial industry reported that CEO bonuses are back to the pre-economic collapse levels again. Another great resource is the work by Harvard Professor, Teresa Amabile. She has been studying the subject in the Fortune 500 companies for years.

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