Why do banksters and senior executives get bonuses? Is it because they’ve delivered outstanding performance? Not really. The reality is that bonuses have become just another way of giving people money…oh, maybe a ‘bonus scheme’ gives shareholders the impression that there are incentives in place to encourage performance, but that’s ‘smoke and mirrors’. As a tool for getting better performance out of an individual, bonuses just do not work.
Probably the worst feature about bonuses is that once given they’re considered to be an entitlement, a part of pay. And when they’re reduced or not given, they become a huge demotivator.
People work best when they’re paid well for what they do – in other words, when money isn’t a primary issue in their working lives. Money worries and bonus jealousies cause unhappiness and demotivate people. Involving people, encouraging them to be innovative, creating an atmosphere that allows them to work with others to make things better (kaizen) is what motivates people best. Add good leadership and you have a winning formula.
This video clip is well worth watching.