In the workplace, there is a special team of people who manage “total rewards” that does everything with the belief that periodic rewards make the employee feel appreciated and a little more engaged. Could it be that our system of rewards is just what is making them disengaged? Could it be that rewarding high performance is precisely what is making people not collaborate with colleagues? Could it be that offering rewards for innovation is stopping the employees from taking on complex problems? What does the science say?
Rewards make us choose targets we are sure to achieve or exceed. We choose fewer challenging goals so that we can achieve them
What are you incentivizing?
Everything around us is about rewards and incentives. We post pictures on social media and then go back and check the number of likes it generated. Instagram offers preset filters that let us choose how each picture can be made to look amazing. We choose a filter that will make the moment look truly distinct and make everyone else feel jealous about the good life you have.
That means we need to frequently post moments from our life that are only “incredible” or “amazing” or “awesome”. Anything short of that is ordinary and ignored. The entire vacation is spent wondering if we missed capturing the perfect sunset rather than experiencing the beauty of the setting sun. I have seen couples go through the marriage rituals a few more times until the photographer gives the nod of approval. Even your harshest critics will liberally shower “likes” on the wedding photos you share. The highest paid wedding photographers guarantee a certain number of likes on Instagram and hence that justifies the premium.
You put up photos on Facebook and each one gets say 50 “likes”. The next one you post gets 3 likes. Think of what that does to you? It demotivates you and makes you less spontaneous. You wonder if the last one was the beginning of a new trend. The number of likes rules your life. Instagram has started hiding the likes that you can see on others' photos (you can see the likes your own photos get). "We will make decisions that hurt the business if they help people's well-being and health", says the CEO of Instagram. Rewards work well in the short run but do not work well in the long term.
When having a large number of team members is celebrated, it encourages everyone to become a people manager. The result is a large percentage of people managers are not fit to lead teams. But they are there because being a terrific individual expert is sneered at by the organization. Organizations reward individual stars and then wonder why collaboration is low among colleagues.
Stop incentivizing learning
Reskilling the entire workforce is going to become part of every organization’s agenda. If we want to get employees to explore new challenges, then STOP incentivizing learning. Setting learning goals generates compliance. A terrific learning experience run by the L&D team may be more valuable than sending people to an Ivy League college. Junior managers are sent for internally run programs while the senior leaders are sent to external programs. When we are determined to do something, we will do it without waiting for rewards. If you want to build a learning organization, stop rewarding and incentivizing learning. Here are some reasons that researcher Alfie Kohn discovered in experiments:
- Rewards kill curiosity. Rewards undermine our natural interest in learning. We work towards getting better test scores than learning something. When the apps offer us badges and stars for learning, we find ways to game the system. The end result is a student who knows how to crack the entrance test of a prestigious institute but is not employable when he/she graduates from it. The L&D budget is the first casualty when the times are tough. All slogans about building a learning organization fail because people know that solving a problem faster is better than trying to figure out why the problem arose in the first place.
- Rewards make us choose targets we are sure to achieve or exceed. We choose fewer challenging goals so that we can achieve them. People learn very quickly that for all the talk about failing being OK, the real heroes are the ones who win. Only successful people are asked to speak about failures. After all the performance appraisal systems only reward people who achieve or exceed goals. This in itself is the basic trigger to “sandbag” our targets for the year. The sales team will first figure out how to get their incentives and plan their sales strategy accordingly.
- Avoids complex problem solving. Studies show that when children are rewarded for solving puzzles, they choose the simplest ones because that is the fastest way to maximize rewards. It robs them of the joy of solving a problem they had to grapple with. We make heroes out of people who overcome adversity. But we rarely create an adverse scenario voluntarily by choosing a difficult problem to work on. Organizations do not tackle problems that require a multi-year effort because reward cycles are often annual.
- Technical debt. Organizations reward and celebrate tangible achievements. Many long-term decisions that impact the health of the company are dropped because it is hard to show quick results. Publicly listed companies are notorious for being myopic and looking only at the next quarter when they have to go to the street to show improvement in share prices or other metrics. The result is that long term solutions and fundamental changes are left for the successor to do. In technical functions, not addressing fundamental tasks is called technical debt that often kills the product or service.
Studies show that when children are rewarded for solving puzzles, they choose the simplest ones because that is the fastest way to maximize rewards. It robs them of the joy of solving a problem they had to grapple with
How about rethinking rewards in 2020 when we have perfect vision? Making work reasonably challenging is reward enough. Don’t ruin it by adding external rewards. Then sit back and watch the magic.