Incentive plans can be defined as the formal plan of actions to be undertaken as a way of promoting a particular behavior among the employees and in turn promoting worker retention as well as among the various customers and dealers. The process involves the giving of rewards to the members of staff and to employees as a way of increasing profitability through improved worker productivity and through improved sales. Rewards given include merchandise, non cash rewards, certificates and gift cards as well as cash. This paper looks at the workability of Incentive plans in Hutchinson and BloodGood LLP, an accounting and consulting Company. It gives reasons why incentives cannot work and hence should not be adopted. Hutchinson and BloodGood is a large consulting and accounting company in California that work towards providing consulting as well as accounting services to clients as a way of maximizing their wealth and to promote business growth.. The company was established in 1922 with an aim of serving their customers by providing quality services at all time. Being an international, regional and even local firm, the company has numerous offices all over California and an employee population of about one hundred professionals and twenty five partners from different back grounds. Other offices are located in regions such as Watsonville, Glendale, Elcentro and San Diego. Just like many other companies, Hutchinson and BloodGood LLP are constantly aiming at increasing the productivity of employees through various ways. This paper discusses why incentive plans are in effective and thus should nit be used in increasing employees’ productivity.
In his article “Why Incentives Plans Cannot Work” Kohn indicates that rewards are only a temporary method of promoting productivity and as one that does not give sustainable or long term solutions to improving worker performance. The harms caused by incentives cannot be recognized immediately but over a period of time meaning that, effects will be felt later and over a long period of time. An organization’s potential cost in implementing reward systems and programs may however be regarded as considerable (Kohn, 156- 157). Hutchinson and BloodGood LLP should aim at making long-term interventional measures to promote sustainable company growth and productivity.
Though employers in the United States of America believe that giving of incentives is an effective way of motivating employees in any level, this is not the case. There are various reasons why the giving of rewards and incentives as a motivational technique in Hutchinson and BloodGood LLP Company cannot really work. One such reason is that these incentives and rewards undermine rather than enhance the expected processes. According to the various research studies done , the findings have indicated that employers who work for incentives or with an aim of being rewarded for their work do not work as effectively as those who are not expecting any kind of reward. This means that the elimination of the use of incentives is likely to yield in higher staff productivity and in turn improve the company’s economic growth. These concept has been attributed to the higher the level of cognitive sophistication, the poorer the performance among employees working to obtain a reward.
Payment cannot be regarded as a motivator. This means that the level of productivity cannot be determined by the amount of money one is receiving. In most cases, junior employees who receive lower salaries and allowances have been found to be more productive than their seniors in the managerial positions. This does not however mean that very little or no pay at all cannot demotivate. Hutchinson and BloodGood LLP should not therefore use the increase of employee salaries as a method of increasing the productivity of their members of staff. Researches done to investigate on what serves as a great motivator to employees ranked pay as the 5th or 6th. The fact that employees showed concerns about their pays does not mean that it is a priority or in this case a motivator. No strong basis has been established to show that increasing employees’ pay will increase their productivity or will make them work more than they already are.
Another major reason why incentives will not work as a motivator is the perception acquired by employees who are promised rewards for their services. Just like punishments, the use of incentives creates a feeling of resentment and fear among the employees who feel controlled by their seniors thus creating a distressing working environment which is not favorable to progress, learning and exploration. This atmosphere is likely to cause defiance among the workers who see the rewards as punitive and one that allows them to be manipulated. The workers are even likely to get angrier and to feel controlled if for some reason the promised reward is not provided after job completion. Incentives create a working situation whereby employees are working to meet the desires of their bosses and in turn get their rewards rather than to meet the set organization mission vision and goals. Each individual here, both employers and employees, work for all the wrong reasons. A happy and free working atmosphere enhances productivity while lack of such leads to very low outputs (Kohn, 157).
Rewards and incentives have been found to break an existing form of relationship or cooperation among employees. As people compete for promised rewards or job positions they are likely to conflict with each other and cannot work together as each of them will try to develop new and secretive ways through which they can be better than their colleagues. Rewards promote a working atmosphere whereby employees work for their own benefit but not for the benefit of the company, clients or society at large. They create a situation whereby there is a winner and a loser thus each employee sees the other not as a colleague but as a competitor. With rewards, the work place turns into a place whereby each employee is working to achieve his or her own set objectives and not that of the company.
Other than weakening relationships between colleagues working at the same level, rewards and incentives are likely to break the relationship existing between the supervisors and their subordinates. Employees working under incentives are less likely to report any problems that they encounter for fear that they will appear incompetent or that they will not receive the promised reward. Incentives therefore destroy the spirit of teamwork an aspect that highly determines productivity and economic growth.
The use of incentives to increase productivity will not address the root causes of existing problems and neither will it deal with the underlying challenges or problems that the company might be facing. Putting up feasible intervention measures requires the identification of the key issues within the company and the root causes of the existing problems. It is only through analyzing a problem from its root causes that workable interventions can be put in place. Giving incentives to employees is an effortless way of temporally dealing with the various challenges. Effective human resource management involves the provision of social support to employees, involving in decision making processes, obtaining feedbacks and creating an enjoyable but motivating working environment. Involving the employees in Identifying the root causes for occurring problems as well as in developing, planning for and implementing workable solutions is by itself a motivation for the workers who feel that they are part and parcel of the company.
According to Kohn, incentives discourage employees from taking risks. This happens in such a way that when workers complete the expected role or assigned task, they are not likely to go an extra mile in exploring other workable alternatives and are not willing to take any risks. It is through this that incentives have been seen as a way of killing creativity and exploration and does not create a chance for employees to develop new ideas that might be beneficial for the company. Studies indicated that employees working to get an incentive will opt to have the less challenging tasks that will only take a short time. In most cases, employees will work towards achieving quantity rather than quality (Kohn, 158).
Other than discouraging creativity, rewards demoralizes and discourages interests such that employees work not because they enjoy what they do, but because they want to be paid or rewarded for the work done. Extrinsic motivators that include incentives cannot in any way be used in place intrinsic ones that include an individual’s own interest. A forceful assignment of tasks creates a feeling of control and reduces an employee’s interest and willingness to work thus reducing productivity rather than promoting it. In instances where the employee may have interest in his or her job, a manger’s over emphasis on the rewards the employee is bound to achieve is likely to kill this interest. Continuous acts of control by an employer highly demoralizes ones willingness to work as well as ones enthusiasm (Kohn, 159).
As conclusion it is evident that giving of incentives is not an effective approach to the motivation of staff workers and thus will not help in increasing the productivity of Hutchinson and BloodGood LLP. Incentives maintain quantity but not quality of work done. The key to employee motivation according to Kohn is ensuring that employees are fairly and well paid and later working towards ensuring that the issue of money during work is completely erased from their minds. Money issues only act as a distraction from the relevant issues and tasks that include the achievement of quality collaboration, choice and content. It does not only affects employees but employers as well. Choice in this case refers to the involvement of workers in the process of decision making while collaboration involves teamwork among employees. Content includes the various tasks that need to be carried out. To do a good job, workers need to feel that they enjoy their work and need to love what they do. Managers need to realize that intrinsic motivators that include self determination and interests work better in increasing employee’s level of productivity than the extrinsic motivators or incentives. They also need to understand the long term negative impacts the reward system will generate for the company.
Kohn, A. "Why Incentive Plans Cannot Work," Harvard Business Review, 54-63, 1993.