Revisit an Important Topic – a repeat posting from 2013
It is accepted wisdom in human resource management practice that financial incentives, wages and bonuses, drive work performance ((Note that we are talking about individuals here. Organizations, for profit, non-profits and government, definitely react positively to financial incentives and disincentives)). This is a part of our business and political culture. ((In fact the notion that people make “rational” decisions based in part on financial rewards is a central pillar of our “if we only let markets work, everything will run smoothly” culture.)) Though studies and surveys have shown for decades that people find many other factors (growth of skills, engagement, sense of purpose, social connection, and many others) to be important in their work, the key to every human resource management strategy has been the compensation plan. Increasingly over the past couple of decades human resource management professionals have devised ever more complex methods for connecting various performance metrics to compensation plans.