My February post that mentioned a former boss and his bonus scheme begs an additional question - why do business bros insist on trotting out these incentive programs if they fall afoul of a simple cost-benefit consideration? It's an important question, and not just because it forces me to admit that despite my constant complaining business bros tend to be a sharp bunch. If the reward offered is so small that employees don't find it to be worth the effort, usually the business bro in charge is aware of the issue. In fact, I remember a few days after the end of the program that our company president mentioned to me in passing that the bonus payout "didn't look very impressive on a check". But surely, we didn't need to see a check to understand the problem. So what's going on here? Is there an underlying truth that carries more weight than my calculation from February?
I think the mental leap is that although the bonus program appears on the surface to be a soggy carrot, in most cases it's understood that such a reward is merely a sugar-coated stick. In other words, the half-edible incentive does less to motivate the team than does the implicit threat of punishment. This is true even when the business bro has good intentions for implementing the program - the response is likely more to do with steering clear of any unstated sanction. The reality is that everyone knows at some point the fact of participation in the program is going to be among the performance evaluation criteria. At minimum, those who've participated will benefit from some intangible rewards, possibly by being regarded as "reliable" or "hard working". The employees understand this, they suspect everything is eventually evaluated, which creates a real problem for anyone who has reservations about participating in the program - the bonus is presented as above and beyond the expectation, but at some point the boss might decide that those who work longer hours are the preferable employees. This looming performance evaluation mechanism, official or not, is the main reason why the decision to participate in the program is much more complex than the simple cost-benefit aspect I mentioned in the prior post.
The problem is magnified when the organization's performance assessment process is not directly linked to a measurable project or outcome, instead being framed in relative terms against a shifting subjective standard for "good standing". These environments subtly remind all staff that as soon as one lemming starts putting in long hours, the rest need to start sprinting for the cliffs lest they be left on the short end of the grading curve. This rat race feeling may be familiar to those who've competed in contexts outside of paid work - I suspect it's true in athletics, academics, social media, and much more; it's the law of nature wherever the standard is relative comparison. At the end of the year, it doesn't matter if the catalyst is a bonus program or not - the review cycle will identify the hardest workers, and the hardest workers will be those who seem to have worked the hardest; the measuring stick is the average work rate within the organization. The bonus program is merely one way to lift the average. The situation is only magnified if the bonus payments are public knowledge, or at least its details accessible to managers, as the numbers can tempt them into using those as shortcuts for performance evaluation.
It seems to me that incentive programs carry a serious risk of driving away anyone who can't afford to participate in it. This exodus may be driven by the "pay cut" factor described last month where the top performers leave to seek wages in line with their abilities, but it would also include employees whose other obligations or interests precluded them from devoting additional time to work. At some point these employees will realize their inability to offer extended time commitments to their work is costing them opportunities, and they will find an organization where the fact of their own lives is not a built-in detriment to their career.
Is this the mechanism that explains pay gaps? I'll stop short of jumping to conclusions but I do think this is an important factor. If I had to answer this question for a given organization, I would ask two questions. First, are existing pay gaps explainable by the ability to work more than forty hours per week? Second, does each staff member have the same constraints when it comes to the first question? I suspect that as I asked these questions while moving up through the levels in the organization, I would find an increasing proportion of those who've simply had more opportunities than their peers. My assumption is that the most common explanation for the fact will make some reference to individual decisions without taking into account how those decisions were influenced by access to certain resources necessary for taking advantage of those opportunities. If my hunch were true there would be far more to say about this fact, but for today I'll simply point out that such an organization would likely favor quantity over quality as it relates to performance, both in terms of measuring individuals as well as their objectives in the hiring process. I'm not sure about you, but I'd much rather prefer to work for someone who worked well rather than worked often, and for an organization who sought this quality in its new hires.
All of this nonsense brings me to my last thought, which is that from my experience there are very few true instances of a carrot or a stick. Or, perhaps a better way to say it is that the best reward is avoiding the punishment. My informal rule of thumb is that if someone offers a pure carrot - in the sense of a reward that can be pursued with no downside - then it's my job to find the hidden stick (and vice-versa). I've heard that in organizations which offer a bonus program, most employees eventually assume the bonus as part of their regular compensation. This is almost always explained with the air of "those silly employees and their careless assumptions" but the reality is that the bonus is surely described as performance based, which means the decision to pursue the bonus is just as much tied to performance as every other aspect of the job. The employees assume that the fact of pursuing the bonus is enough to earn the bonus, so why wouldn't they count those dollars? They know that if for some reason they don't earn the bonus, it likely means they are already on their way to being sacked, so perhaps the better way to describe the situation is that "employees assume if they are still employed, they'll get the bonus". They know the truth - if you aren't being hit with it, it's easy enough to enjoy the carrot.
