This is practically heresy to business schools but it’s consistent with the work of one of my heroes, Alfie Kohn (have you read Punished by Rewards?) Bribery-style compensation (if you do this we will pay you more) often backfires. Now HBR has published an article calling for the abolishment of pay for performance for executives and instead recommends a salary.
This research shows why powerful leaders often can’t accomplish much as a group. (Think Congress, boardrooms.) They jockey for status. So we are left to assume we should either share power more evenly or send the powerful to their room.
Give your employees a formal way to say thank you to their peers. It can do a lot more to encourage good performance than the worn-out performance review and it costs roughly 95% less than giving out raises. Here is an interesting example of a point system that translates into dinners and vacations.
Netflix has aligned its culture with the principles Marsha and I espoused for over 30 years. They call it Freedom and Responsibility. The ‘and’ is important. If you manage people, read this. If you have a boss, send this to him or her.