incentives complexity

Incentives Complexity

Incentives may have a sweet topping; but

underneath they may be deleterious

How?

Let us start on our discovery journey

There is complexity in motivation and this complexity warrants greater attention

The motivation to give incentives will work up to a certain range (optimal range). Say, somebody welcomes monetary incentives. This is correct up to a limit, when the same person might seek different incentives such as more work responsibility.

There is a switch over of preferences

A second point is the realization that there exists a feedback

mechanism that might lead to non-linear results.

Giving more money to an employee will motivate him. This motivation

increases his productivity and desirability to do more work, which in turn enhances his eligibility for more

financial incentives

The Feedback Loop

These positive feedback interactions lead to surprising results that are non-

linear

Imagine if same employees keep getting the majority of financial

incentives

Big financial incentives create disparities

These disparities weaken any

system such as organizations

Eggshells would be

very hard to break if

they were thicker

Thick cement blocks are

easy to break the more

disparity there is in their

voids

Do not allow for disparity in

your organization

Else, the organization will become

like….

Fragile Glass-Like

Organizations

Shutters

1 more point

People future rewards are

based on today's rewards

This may lead to widening

the gaps within

organizations

Beware of the inflation of incentives

Do not limit your incentives to

monetary ones; mix them with

other incentives such as traveling