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Be Very Careful About How You Incent Staff to Perform

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Wells Fargo is now believed to have set up more than 3.5 million fake accounts. (The previous number was 2 million.) This is according to lawyers investigating the matter. See the story here. Incidentally, doesn’t it seem as if bad news about companies usually goes from bad to worse before it gets better?

The reason I bring this up is because I’m reading a book called Drive by Dan Pink and it’s about how people are motivated today. Dan says that using the carrot and stick approach to incent the behavior of knowledge workers could backfire on you.
Here’s the connection to the Wells Fargo story. Dan says that giving people rewards for doing things could make them addicted to the behavior and could lead to corruption. Whoa, that fits this situation perfectly. Worse, you generally have to provide more money for the behavior to happen more and more. I wouldn’t be surprised to hear that Wells increased payouts for the fake account setup over the years to continue to goose the numbers.

 

If you’re thinking about paying incentives to get better performance, be aware of the risks involved. Here’s an article from the Society for Human Resource Management (SHRM) that highlights how this can go wrong and cause cheating. Ever heard of a salesperson cheating to make a commission? Well, it’s not just salespeople who are tempted to do the wrong thing when money’s the reward.

Leaders need to know what really motivates people beyond the traditional carrot and stick tools. Drive shares four decades of research to help you better understand what really motivates knowledge workers aka heuristic workers as Dan likes to call them.

By the way, if you’re a parent, here’s a tip on motivating children at home. Don’t pay them to do things you think they won’t like to do like washing the dishes or taking out the trash. When you paint the picture that this is dirty work and you shouldn’t want to do it, so I’ll pay you to do it, that sends the wrong message in a few ways. They won’t ever want to do it without being paid, and they’re likely to do it less well than if you motivated them some other way.

Surprisingly, financial payouts tied to performance often don’t bring out a person’s best work. You could learn a lot by reading this book. Get more information about Drive here. If you’d like some tips on motivating a team, American Express has tapped some experts to pull together a guide, which can be downloaded here.

 

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Michael Neuendorff

Strategic Business Coach at The Growth Coach
Michael Neuendorff is a versatile business coach, trainer and speaker. He helps professionals and small business owners grow personally and professionally through a combination of new knowledge, more purposeful action, and a fresh mindset. Michael specializes in the areas of sales, online marketing, public speaking, and strategic planning. Michael holds an Advertising degree from Arizona State University.

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