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Describe in as much detail as possible why you think it is particularly difficult to create effective bonus/rewards programs.

MGMT 3303- Individual Creativity Assignment

Due date:  4/7/14

Bonuses Can Backfire

It might seem obvious that people will be motivated by bonuses, but many scholars question this premise. Alfie Kohn has long suggested that workers are “punished by rewards” and urges that organizations avoid tying rewards to performance because of the negative consequences that can result. As an alternative to rewards, some experts recommend that managers foster a positive, upbeat work environment in hopes that enthusiasm will translate into motivation.

Although rewards can be motivating, they can reduce employees’ intrinsic interest in the tasks they are doing. Along these lines, Mark Lepper of Stanford University found that children rewarded for drawing with felt-tip pens no longer wished to use the pens at all when rewards were removed, whereas children who were not rewarded for using the pens were eager to use them. Similar experiments in which children completed puzzles have also shown that increasing rewards can decrease interest in the rewarded task. Some have questioned the extent to which these results generalize to working adults, but concern about rewards diminishing intrinsic motivation persists.

Rewards can also lead to misbehavior by workers. Psychologist Edward Deci notes, “Once you start making people’s rewards dependent on outcomes rather than behaviors, the evidence is people will take the shortest route to those outcomes.” Consider factory workers paid purely based on the number of units they produce. Because only quantity is rewarded, workers may neglect quality. Executives rewarded strictly on the basis of quarterly stock price will tend to ignore the long-term profitability and survival of the firm; they might even engage in illegal or unethical behavior to increase their compensation. A review of research on pay-for-performance in medicine found that doctors who were rewarded for treatment out- comes were reluctant to take on the most serious cases, where success was less likely.

Although there might be some problems with providing incentives, the great majority of research cited in this and the previous chapter shows that individuals given rewards for behavior will be more likely to engage in the rewarded behaviors. It is also unlikely that individuals engaged in very boring, repetitive tasks will lose their intrinsic motivation if the task is rewarded, because they never had any intrinsic motivation to begin with. The real issue for managers is finding an appropriate way to reward behaviors so desired behavior is increased while less-desired behavior is reduced.

Robbins, Stephen P, and Timothy A Judge (2013), Organizational Behavior. Boston: Pearson. (Page 265)

Case sources as cited in your book: Based on N. Fleming, “The Bonus Myth” New Scientist 210 (2011), pp. 40–43; D. Woodward, “Perking Up the Workplace,” Director (February 2011), pp. 33–34; and G. G. Scott, “How to Create a Motivating Environment,” Nonprofit World 28 (September/October 2010), p. 9.

Instructions:

1.     Read the above excerpt from your textbook.

2.     Think about designing an innovative bonus/reward program that would avoid the problems mentioned in the case.

3.     Your one-page, single-spaced paper should be structured as follows:

a.      First paragraph: offer a complete summary of the case (above) in your own words. [5 short sentences or less]

b.     Second paragraph: describe in as much detail as possible why you think it is particularly difficult to create effective bonus/rewards programs. You may want to do your own research on the topic and consult the references cited in the textbook. [5 short sentences or less]

c.      Third paragraph: using your knowledge bonus/rewards programs and based on the research that you’ve done as well as the understanding of the issues described on the previous page, identify one creative strategy that you could use to create a bonus/reward program avoiding the problems mentioned in the case. As you will see from the grading rubric, your strategy needs to be creative. In this paragraph, which should comprise a substantial part of your one-page assignment, try to address all dimensions of creativity as defined in the rubric. If you use outside sources, you must cite them at the end of your report. Citations do not count toward the one-page limit. [bulk of your report]

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