Pay then becomes a means business leaders use to communicate how all stakeholders participate in the wealth multiple growth-oriented results produce. Rather, it’s about using the construct of pay (the form compensation takes-especially “incentives”) as a strategic tool to reinforce the outcomes upon which business growth depends. With this approach, it’s no longer about rewarding specific conduct or trying to elicit performance based on a “carrot and stick” approach.
So, let’s see if we can lessen the intrinsic versus extrinsic tension just a little bit, shall we? Let’s all take a deep breath and sort this out.
Meanwhile, enterprise leaders scratch their heads and wonder how to make sense of it all in their day-to-day “how should I pay this person?” world. The general claim in these examinations is that people are driven primarily (some claim entirely) by intrinsic motivators and that extrinsic “if you do this then you’ll get that” programs not only aren’t beneficial, they are most often harmful. A recent Harvard Business Review article is the latest example. Some researchers, academicians and authors continue to serve up evidence that, as a general rule, performance incentives don’t work…and can even be destructive.