Thinking Managers

Robert Heller of makes the point that businesses have grown to rely far too heavily on monetary incentives.

Rewards and Incentives

It’s only logical to assume that you can set targets for any manager, setting out how he or she will seek to achieve excellent results and what rewards will flow from success, plus what fate will accompany any failure. But exactly which measures of excellence should you apply?

Certain tests are indeed reasonably secure. The marketing boss, for instance, can be asked to produce targets for sales and profits by each product line, say. Rewards can then be linked to the achievement or failure of this plan. Any firm without such focused plans is not well managed. But not many CEOs get this treatment.

The whole point of the exercise, however, is to set standards and drive effort forwards. This approach has an incentive effect, but that is a secondary result of commitment to producing desirable and desired results. This conveniently avoids a logical trap. Imagine that the above marketing director has a bonus scheme as well as a salary. Do you suppose that, in the absence of a nice fat bonus, the executive would work with less commitment, attention and desire?

Would you hire or keep any well-paid worker whose performance didn’t match their ability and potential? This is a very common problem, after all - and the Performance Matrix illustrates it very neatly. On one side of the matrix is CAN DO and CAN’T DO. Is the person able to carry out the function concerned, or is the ability absent? On the other side of the matrix is a key question. Is the employee well motivated? Is the person in question a WILL DO or WON’T DO individual?

Be aware that a WON’T DO, CAN’T DO person is beyond the reach of any incentives or any training. So you can forget (and lose) them without regret, other than cursing the error of your own when hiring or promoting.

What you need, of course, is a CAN DO, WILL DO wonder. By definition, this achiever does not depend on material reward for motivation. He or she produces great results because they are great people.

If you have hired or teamed up with pure executive gold, incentivising your colleagues is not going to pose a problem. They can just incentivise themselves, which historically was the common root of all incentive schemes.
Self-interest is a powerful engine of economic performance, but it is in no way the only one. The economic motor needs many other powerful parts, such as delegation and teamwork.

These components go beyond self-interest while still drawing upon the selfish personal drives. There is a selfish element in all achievements. Not many things in life are more gratifying and satisfying than bringing an organisation or project into thrilling success.

Perhaps in time the bonus kings of banks and big business will come to realise that success is not driven by money alone and that true worth of talented and committed people cannot be measured only in money.

About the author
Robert Heller is one of the world’s best selling authors on business management.