Employee Incentive Quotes

There is no harder worker than a former government employee who has discovered the word incentive.

How does paying people more money make you more money? It works like this. The more you pay your workers, the more they spend. Remember, they're not just your workers- they're your consumers, too. The more they spend their extra cash on your products, the more your profits go up. Also, when employees have enough money that they don't have to live in constant fear of bankruptcy, they're able to focus more on their work- and be more productive. With fewer personal problems and less stress hanging over them, they'll lose less time at work, meaning more profits for you. Pay them enough to afford a late model car (i.e. one that works), and they'll rarely be late for work. And knowing that they'll be able to provide a better life for their children will not only give them a more positive attitude, it'll give them hope- and an incentive to do well for the company because the better the company does, the better they'll do. Of course, if you're like most corporations these days- announcing mass layoffs right after posting record profits- then you're already hemorrhaging the trust and confidence of your remaining workforce, and your employees are doing their jobs in a state of fear. Productivity will drop. That will hurt sales. You will suffer. Ask the people at Firestone: Ford has alleged that the tire company fired its longtime union employees, then brought in untrained scab workers who ended up making thousands of defective tires- and 203 dead customers later, Firestone is in the toilet.

Good management has a lot to do with incentives and decentives. It's about making sure the company has systems in place that incentivize desired behaviors and decentivize undesirable behavior.

Tell your child, your spouse, or your employee that he or she is stupid or dumb at a certain thing, has no gift for it, and is doing it all wrong, and you have destroyed almost every incentive to try to improve.

Cooperatives have lower absentee rates and less worker turnover than their conventional competitors. (For instance, the annual rate of turnover in the Mondragon cooperatives in 1974 was two percent, while in comparable capitalist firms it was 14 percent.)94 Members show relatively high individual work effort, tending to act as their own supervisors, at least to a greater degree than employees do elsewhere. Job rotation, where it happens, enhances the attractiveness of the work. And there are greater incentives to help one another than in a competitive environment.

Employees respect a boss who knows the difference between the mundane and the exceptional. Remember that not all employees respond well to incentive bonuses or a dangled carrot of any kind. They seek recognition, not bribery. 7.

People act in ways to maximize their self-interest within a company, so create incentives that align employee's objectives with the organization's mission statement. Reward compliance with core values as much as profitability, especially in the face of competitive pressures.

QUESTIONS TO CONSIDER • As you survey your company-wide policies and procedures, ask: What is the purpose of this policy or procedure? Does it achieve that result? • Are there any approval mechanisms you can eliminate? • What percentage of its time does management spend on problem solving and team building? • Have you done a cost-benefit analysis of the incentives and perks you offer employees? • Could you replace approvals and permissions with analysis of spending patterns and a focus on accuracy and predictability? • Is your decision-making system clear and communicated widely?

Who cheats? Well, just about anyone, if the stakes are right. You might say to yourself, I don’t cheat, regardless of the stakes. And then you might remember the time you cheated on, say, a board game. Last week. Or the golf ball you nudged out of its bad lie. Or the time you really wanted a bagel in the office break room but couldn’t come up with the dollar you were supposed to drop in the coffee can. And then took the bagel anyway. And told yourself you’d pay double the next time. And didn’t. For every clever person who goes to the trouble of creating an incentive scheme, there is an army of people, clever and otherwise, who will inevitably spend even more time trying to beat it. Cheating may or may not be human nature, but it is certainly a prominent feature in just about every human endeavor. Cheating is a primordial economic act: getting more for less. So it isn’t just the boldface names — inside-trading CEOs and pill-popping ballplayers and perkabusing politicians — who cheat. It is the waitress who pockets her tips instead of pooling them. It is the Wal-Mart payroll manager who goes into the computer and shaves his employees’ hours to make his own performance look better. It is the third grader who, worried about not making it to the fourth grade, copies test answers from the kid sitting next to him. Some cheating leaves barely a shadow of evidence. In other cases, the evidence is massive. Consider what happened one spring evening at midnight in 1987: seven million American children suddenly disappeared. The worst kidnapping wave in history? Hardly. It was the night of April 15, and the Internal Revenue Service had just changed a rule. Instead of merely listing the name of each dependent child, tax filers were now required to provide a Social Security number. Suddenly, seven million children — children who had existed only as phantom exemptions on the previous year’s 1040 forms — vanished, representing about one in ten of all dependent children in the United States.

We ought to care for those closest to us in terms of relatedness. After our immediate family, we ought to pursue our calling diligently as employees and provide just incentives (perhaps through profit-sharing) and reasonable care for our workers as employers. We should seek the wisdom of teachers and elders in society and look to them for leadership, while rejecting their folly when it is discerned. We must put our children and their education, both at home and in school, before our own entertainment, pleasure, and success. We ought not to tolerate insolence or haughtiness in them; nor ought we to punish them too severely, but should lead them as good teachers, by example and patient instruction.

Just like married couples, companies can fall into the dissonance trap if they think they’re sending employees one message but those employees hear something very different. CEOs who think their firms are great places to work often are stunned when I tell them their staffs find these companies stifling, unrewarding, unfriendly, or just plain awful. This is a bad situation because it’s an open loop: There’s no feedback to correct the dissonance, so it grows worse over time. The CEO typically grows bitter, decides that “these people are underproductive whiners,” and implements punitive changes that make matters worse. The employees, in turn, grow even more annoyed or angry. Left uncorrected, this can lead to the worst-case scenario of a CEO giving people the least possible incentive to keep them working and those people doing the least they can to just hold onto their jobs, a situation that can bring a company to its knees.

So-called “battered women’s shelters” have been called “one-stop divorce shops” because they are “extreme militant feminist” operations that exist mostly to separate children from their fathers, even without any demonstration of violence. Erin Pizzey, who founded the first shelter in London in 1971, claims that her movement has been “hijacked” by feminists. Extended investigations by Canada’s National Post and others revealed a violently anti-male agenda, corruption, drug and alcohol use, child abuse, and even, ironically, violence against women. Yet they continue to receive government funding. One woman whose husband “didn’t beat me up or nothing, we just had an argument,” says shelter workers ignored her pleas and pressured her to leave her marriage. “They asked me if I was abused, and I said, ‘No.’ They wanted me to get a lawyer, and I said, ‘For what?’” She maintains shelter employees tried to “trick” her into making incriminating statements about her husband. “Everything negative about him, they wrote it down. If I said something nice about him, they wouldn’t write it down. I kept telling them, ‘No, he didn’t hit me.’” She was offered financial incentives to leave her husband. “They said, ‘If you leave him, we can help you find a place right away.’ But I said, ‘I don’t want to leave him.’ . . . They wanted that so bad. They were trying to break up a family, and I didn’t want that.

The Seventh Central Pay Commission was appointed in February 2014 by the Government of India (Ministry of Finance) under the Chairmanship of Justice Ashok Kumar Mathur. The Commission has been given 18 months to make its recommendations. The terms of reference of the Commission are as follows:  1. To examine, review, evolve and recommend changes that are desirable and feasible regarding the principles that should govern the emoluments structure including pay, allowances and other facilities/benefits, in cash or kind, having regard to rationalisation and simplification therein as well as the specialised needs of various departments, agencies and services, in respect of the following categories of employees:-  (i) Central Government employees—industrial and non-industrial; (ii) Personnel belonging to the All India Services; (iii) Personnel of the Union Territories; (iv) Officers and employees of the Indian Audit and Accounts Department; (v) Members of the regulatory bodies (excluding the RBI) set up under the Acts of Parliament; and (vi) Officers and employees of the Supreme Court.   2. To examine, review, evolve and recommend changes that are desirable and feasible regarding the principles that should govern the emoluments structure, concessions and facilities/benefits, in cash or kind, as well as the retirement benefits of the personnel belonging to the Defence Forces, having regard to the historical and traditional parties, with due emphasis on the aspects unique to these personnel.   3. To work out the framework for an emoluments structure linked with the need to attract the most suitable talent to government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance system to respond to the complex challenges of modern administration and the rapid political, social, economic and technological changes, with due regard to expectations of stakeholders, and to recommend appropriate training and capacity building through a competency based framework.   4. To examine the existing schemes of payment of bonus, keeping in view, inter-alia, its bearing upon performance and productivity and make recommendations on the general principles, financial parameters and conditions for an appropriate incentive scheme to reward excellence in productivity, performance and integrity.   5. To review the variety of existing allowances presently available to employees in addition to pay and suggest their rationalisation and simplification with a view to ensuring that the pay structure is so designed as to take these into account.   6. To examine the principles which should govern the structure of pension and other retirement benefits, including revision of pension in the case of employees who have retired prior to the date of effect of these recommendations, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the New Pension Scheme (NPS).   7. To make recommendations on the above, keeping in view:  (i) the economic conditions in the country and the need for fiscal prudence; (ii) the need to ensure that adequate resources are available for developmental expenditures and welfare measures; (iii) the likely impact of the recommendations on the finances of the state governments, which usually adopt the recommendations with some modifications; (iv) the prevailing emolument structure and retirement benefits available to employees of Central Public Sector Undertakings; and (v) the best global practices and their adaptability and relevance in Indian conditions.   8. To recommend the date of effect of its recommendations on all the above.

It doesn't matter how much companies talk about equality and inclusiveness. What matters are the incentives it creates for employees. Those incentives speak louder than any speeches by the CEO, or bias training workshops, or posters on a wall.

Publicly traded corporations direct financial surpluses back to investors, CEOs, and boards of directors. They have little incentive to churn it back into the business and, as we have seen, a great deal of incentive to maximize surpluses at the expense of employees, the environment, and even the corporation itself.82

As long as ratings are directly linked to pay and career opportunities, every employee has this incentive to exploit the system. And

With that focus on quality and discipline, NI has been profitable nearly every year, a record that Buffett claimed has left others in the dust. The key has been having incentives in place to get the right employee behavior. And for that, you must think the business through. Munger

To fill this gap in the capital market, Davis and Rock set themselves up as a limited partnership, the same legal structure that had been used by a short-lived rival called Draper, Gaither & Anderson.[18] Rather than identifying startups and then seeking out corporate investors, they began by raising a fund that would render corporate investors unnecessary. As the two active, or “general,” partners, Davis and Rock each seeded the fund with $100,000 of their own capital. Then, ignoring the easy loans to be had from the fashionable SBIC structure, they raised just under $3.2 million from some thirty “limited” partners—rich individuals who served as passive investors.[19] The beauty of this size and structure was that the Davis & Rock partnership now had a war chest seven and a half times larger than an SBIC, and with it the ammunition to supply companies with enough capital to grow aggressively. At the same time, by keeping the number of passive investors under the legal threshold of one hundred, the partnership flew under the regulatory radar, avoiding the restrictions that ensnared the SBICs and Doriot’s ARD.[20] Sidestepping yet another weakness to be found in their competitors, Davis and Rock promised at the outset to liquidate their fund after seven years. The general partners had their own money in the fund, and thus a healthy incentive to invest with caution. At the same time, they could deploy the outside partners’ capital for a limited time only. Their caution would be balanced with deliberate aggression. Indeed, everything about the fund’s design was calculated to support an intelligent but forceful growth mentality. Unlike the SBICs, Davis & Rock raised money purely in the form of equity, not debt. The equity providers—that is, the outside limited partners—knew not to expect dividends, so Davis and Rock were free to invest in ambitious startups that used every dollar of capital to expand their business.[21] As general partners, Davis and Rock were personally incentivized to prioritize expansion: they took their compensation in the form of a 20 percent share of the fund’s capital appreciation. Meanwhile, Rock was at pains to extend this equity mentality to the employees of his portfolio companies. Having witnessed the effect of employee share ownership on the early culture of Fairchild, he believed in awarding managers, scientists, and salesmen with stock and stock options. In sum, everybody in the Davis & Rock orbit—the limited partners, the general partners, the entrepreneurs, their key employees—was compensated in the form of equity.

INCENTIVES – “From all business, my favorite case on incentives is Federal Express. The heart and soul of their system—which creates the integrity of the product—is having all their airplanes come to one place in the middle of the night and shift all the packages from plane to plane. If there are delays, the whole operation can’t deliver a product full of integrity to Federal Express customers. And it was always screwed up. They could never get it done on time. They tried everything—moral suasion, threats, you name it. And nothing worked. Finally, somebody got the idea to pay all these people not so much an hour, but so much a shift—and when it’s all done, they can go home. Well, their problems cleared up overnight.” – Here Charlie is talking about incentives. All of us who have held hourly jobs know that if workers are paid by the hour they will work more slowly than if they are paid them by the job. Why? Because if they are paid by the hour, they have an incentive to work more slowly in order to put more hours on the clock and make more money. But if they are paid by the job, there is an incentive to work quickly so they can get onto the next job and make more money. Federal Express aligned management’s goals with employee incentives. With hourly pay their employees were never in a hurry, but when pay was given for a specific task—getting a plane loaded—suddenly they were in a rush to get the job done. The key wasn’t paying workers by the task or shift; the key was letting them go home if they finished early, which was a kind of financial reward in that they were getting paid for the full shift even if they left early.

Thus, there is a gap between the measureable contribution and the actual, total contribution of the agent. As a result, measured performance (such as an increase in the division’s profits or a rise in the company’s stock price) may actually lead to the organization getting less of what it really needs from its employees. Moreover, there was an inevitable distortion of incentives created by the quest for simple, quantifiable standards by which to measure and reward performance

Other narratives in the same constellation with the Laffer curve sprang up around the same time. The terms leveraged buyouts and corporate raiders also went viral in the 1980s, often in admiring stories about companies that responded well to true incentives and that produced high profits as a result. One marker for such stories is the phrase maximize shareholder value, which, according to ProQuest News & Newspapers and Google Ngrams, was not used until the 1970s and whose usage grew steadily until the twenty-first century. The phrase maximize shareholder value puts a nice spin on questionable corporate raider practices, such as saddling the company with extreme levels of debt and ignoring implicit contracts with employees and stakeholders. Maximize suggests intelligence, science, calculus. Shareholder reminds the listener that there are people whose money started the whole enterprise, and who may sometimes be forgotten. Value sounds better, more idealistic, than wealth or profit. Use of the three words together as a phrase is an invention of the 1980s, used to tell stories of corporate raiders and their success. The term maximize shareholder value is a contagious justification for aggressiveness and the pursuit of wealth, and the narratives that exploited the term are most certainly economically significant.

The most unjustly rewarded executives in the world had wrecked Western economies and shown no willingness to change their ways. Yet it never occurred to the supposedly liberal-left governments of Barack Obama and Gordon Brown to provide incentives to allow employees to speak up and speak truthfully, or to impose penalties on those who stayed silent.

Most contemporary option plans have provisions whereby all granted options fully vest immediately prior to an acquisition should the plan and/or options underneath the plan not be assumed by the buyer. While this clearly benefits the option holders and helps incentivize the employees of the seller who hold options, it does have an impact on the seller and the buyer. In the case of the seller, it will effectively allocate a portion of the purchase price to the option holders. In the case of the buyer, it will create a situation in which there is no forward incentive for the employees to stick around since their option value is fully vested and paid at the time of the acquisition, resulting in the buyer having to come up with additional incentive packages to retain employees on a going-forward basis. Many lawyers will advise in favor of a fully vesting option plan because it forces the buyer to assume the option plan, because if it did not, then the option holders would immediately become shareholders of the combined entities. Under the general notion that fewer shareholders are better, this acceleration provision motivates buyers to assume option plans. This theory holds true only if there is a large number of option holders. In the past few years we've seen cases where

As long as ratings are directly linked to pay and career opportunities, every employee has this incentive to exploit the system.

Half of all law enforcement agencies in the United States have fewer than ten officers, and nearly three-quarters have fewer than 25 officers.48 Lawrence Sherman noted in his testimony that “so many problems of organizational quality control are made worse by the tiny size of most local police agencies . . . less than 1 percent of 17,985 U.S. police agencies meet the English minimum of 1,000 employees or more.”49 These small forces often lack the resources for training and equipment accessible to larger departments and often are prevented by municipal boundaries and local custom from combining forces with neighboring agencies. Funding and technical assistance can give smaller agencies the incentive to share policies and practices and give them access to a wider variety of training, equipment, and communications technology than they could acquire on their own. Table 1. Full-time state and local law enforcement employees, by size of agency, 2008

Why do some of us work hard and some of us sit on our asses all day? Dan Pink, a New York Times and Wallstreet Journal bestselling author, argues that there are three main motivators―and they’re not what you think. Money doesn’t make the list. In fact, money can be a demotivator. It turns out that once you get beyond work that only requires rudimentary cognitive skill, higher monetary rewards are inversely related to performance. Instead, emotion becomes the driving force. More specifically, Pink defines the three main motivators as autonomy, mastery, and purpose.2 This has been backed up by numerous scientific studies. Here’s one: “Psychologists Teresa Amabile and Steven Kramer interviewed over 600 managers and found a shocking result. 95 percent of managers misunderstood what motivates employees. They thought what motivates employees was making money, getting raises and bonuses. In fact, after analyzing over 12,000 employee diary entries, they discovered that the number one work motivator was emotion, not financial incentive: It’s the feeling of making progress every day toward a meaningful goal.”3 Consider what this means. If you aren’t hardworking, maybe it’s not because you’re lazy, but because you hate what you’re working on! I believe there’s a hustler in all of us. It isn’t about your genetic makeup. It’s about your environment and the emotional state in which you’re operating. If you’re having trouble getting up in the morning and going to work, there’s a good chance you’d be happier hustling. You just need to find the right thing to be hustling toward, and the right people to support you. If you had all the free time in the world, what would you want to master? What would give you a sense of purpose? What would make your heart beat a little louder? The hustle is somewhere inside you. You just have to find it and set it free.

Thus, contrary to the popular narrative that people are slaves to the terms on which a given employer may be willing to hire them, the employers themselves are subject to concrete economic incentives not to short change employees either on the basis of wages or working conditions. Such incentives are due to competition between employers for labor, just as there is competition between prospective employees for jobs. If

Meanwhile, after polling its employees in search of incentives that will bring more female hires, Apple will in January begin offering to pay for egg-freezing for their female employees (like Facebook already does).

Virtually all large companies offer some sort of wellness benefit as part of their health insurance program. But fewer than 4 in 10 use financial incentives to get employees to participate or meet specific health goals.

Some behavioral psychologists defend the practice of punishing employees on the grounds that it helps to “clarify management’s expectations of performance and promote goal setting.”81 (This is comparable to the claim that throwing employees out an office window helps to clarify what floor they work on.) One

The second way was explained to me by a group of General Electric executives a few years back. I pressed them about their rather extreme ‘rank and yank’ system (which has been modified recently, but not much), where each year the bottom 10 percent of employees (‘C players’) are fired, the top 20 percent (‘A players’) get the lion’s share – about 80 percent – of the bonus money, and the mediocre middle 70 percent (‘B players’) get the remaining crumbs. I pressed them because a pile of studies shows that giving a few top performers most of the goodies damages team and organizational performance. This happens because people have no incentive to help others – but do have an incentive to undermine, bad-mouth, and demoralize coworkers, because pushing down others decreases the competition they face. Performance also suffers because hard workers who aren’t anointed A players become bitter and withhold effort.

Success depends on careful behavioral planning, preparing employees and leaders to observe and encourage behavior, and addressing systemic consequences (measurement, incentive, performance-management systems) that might impede new behavior. Choosing

handing individual employees control over how the organization gives back to the community might do more to improve their overall satisfaction than one more “if-then” financial incentive.

Goals that are vague, half-remembered, or misconstrued provide negligible neurochemical incentive and reward.

Consistent Active Effort offers the best predictability at getting consistent, sustainable results in all roles. Rewarding consistent effort is how to create incentive to continue that effort.

Neurochemical incentive and reward lies in employees experiencing the right amount of challenge that allows them to maintain confidence and optimism that they can successfully meet expectations and receive the corresponding neurochemical reward.

Leaders have to give employees a way to win. Since it can’t be guaranteed they’ll get the result every time, it’s important to make the process of putting forth effort neurochemically rewarding enough to maintain the incentive to engage.

Clarity in expectation becomes clarity in demonstration, allowing you to offer “You did it!” serotonin rewards, which become incentives to continue demonstrating the desired attitude, mindset, and behavior.

When we are confident we can meet expectations, more challenging expectations produce more reward and incentive.

These organizations will not reexamine their offices or their management practices. They won’t interrogate who benefits from existing structures, because they’re pleased with who benefits from existing structures. They will view hybrid work as an annoyance to be tolerated or an incentive to be lorded over workers to keep them productive. And to ensure that their newly liberated employees are on their best behavior, they will take the easiest, laziest way out.

we need simply look at how capitalism changed after the idea of shareholder supremacy took over—which only happened in the final decades of the twentieth century. Prior to the introduction of the shareholder primacy theory, the way business operated in the United States looked quite different. “By the middle of the 20th century,” said Cornell corporate law professor Lynn Stout in the documentary series Explained, “the American public corporation was proving itself one of the most effective and powerful and beneficial organizations in the world.” Companies of that era allowed for average Americans, not just the wealthiest, to share in the investment opportunities and enjoy good returns. Most important, “executives and directors viewed themselves as stewards or trustees of great public institutions that were supposed to serve not just the shareholders, but also bondholders, suppliers, employees and the community.” It was only after Friedman’s 1970 article that executives and directors started to see themselves as responsible to their “owners,” the shareholders, and not stewards of something bigger. The more that idea took hold in the 1980s and ’90s, the more incentive structures inside public companies and banks themselves became excessively focused on shorter-and-shorter-term gains to the benefit of fewer and fewer people. It’s during this time that the annual round of mass layoffs to meet arbitrary projections became an accepted and common strategy for the first time. Prior to the 1980s, such a practice simply didn’t exist. It was common for people to work a practical lifetime for one company. The company took care of them and they took care of the company. Trust, pride and loyalty flowed in both directions. And at the end of their careers these long-time employees would get their proverbial gold watch. I don’t think getting a gold watch is even a thing anymore. These days, we either leave or are asked to leave long before we would ever earn one.

Finding the Competitive Levers When there’s a battle between two networks, there are competitive levers that shift users from one into the other—what are they? The best place to focus in the rideshare market was the hard side of the network: drivers. More drivers meant that prices would be lower, attracting valuable high-frequency riders that often comparison shop for fares. Attract more riders, and it more efficiently fills the time of drivers, and vice versa. There was a double benefit to moving drivers from a competitor’s network to yours—it would push their network into surging prices while yours would lower in price. Uber’s competitive levers would combine financial incentives—paying up for more sign-ups, more hours—with product improvements to improve Acquisition, Engagement, and Economic forces. Drawing in more drivers through product improvements is straightforward—the better the experience of picking up riders and routing the car to their destination, the more the app would be used. Building a better product is one of the classic levers in the tech industry, but Uber focused much of its effort on targeted bonuses for drivers. Why bonuses? Because for drivers, that was their primary motivation for using the app, and improving their earnings would make them sticky. But these bonuses weren’t just any bonuses—they were targeted at quickly flipping over the most valuable drivers in the networks of Uber’s rivals, targeting so-called dual apping drivers that were active on multiple networks. They were given large, special bonuses that compelled them to stick to Uber, and every hour they drove was an hour that the other networks couldn’t utilize. There was a sophisticated effort to tag drivers as dual appers. Some of these efforts were just manual—Uber employees who took trips would just ask if the drivers drove for other services, and they could mark them manually in a special UI within the app. There were also behavioral signals when drivers were running two apps—they would often pause their Uber session for a few minutes while they drove for another company, then unpause it. On Android, there were direct APIs that could tell if someone was running Uber and Lyft at the same time. Eventually a large number of these signals were fed into a machine learning model where each driver would receive a score based on how likely they were to be a dual apper. It didn’t have to be perfect, just good enough to aid the targeting.

The original idea, favored by Jack Welch, former CEO of GE, was that every company should aim for a certain level of turnover, whatever the consequences. The system was rife with perverse incentives. Peers who sabotaged others’ work could save their own jobs; managers might hire less-capable people on their teams to keep from having to fire existing employees whom they favored. Despite the system’s drawbacks, Welch’s influence was so far-reaching that stack ranking was adopted at many of today’s tech giants, where it wreaked havoc on morale and productivity for decades. Eventually, its negative effects became well known enough to make the practice a liability at companies chasing workers whose specialized talents made them scarce, such as engineers. In the mid-2010s, companies including Google, Microsoft, and Amazon abandoned it.

It’s not easy to recognize, in real time, when you’re throwing good money after bad—which is why I think analyzing progress should be a “team sport.” You have to be willing to solicit input from people who have different perspectives on the project. To overcome the “sunk costs” fallacy, this helps to change the default incentive (to keep going) so people can feel good about saying it’s time to stop. Astro Teller, head of the radical innovation company called X at Alphabet (Google’s parent company), gives failure bonuses to employees who admit a project isn’t working.

managers don’t seem to be aware of this. In a related study, Amabile asked 669 managers to rank five different factors affecting employee morale: support for making progress, recognition for good work, monetary incentives, interpersonal support, and clear goals. Only 5 percent ranked support for making progress first, and most ranked it dead last.

The next time you go to the supermarket, look closely at a can of peas. Think about all the work that went into it—the farmers, truckers, and supermarket employees, the miners and metalworkers who made the can—and think how miraculous it is that you can buy this can for under a dollar. At every step of the way, competition among suppliers rewarded those whose innovations shaved a penny off the cost of getting that can to you. If God is commonly thought to have created the world and then arranged it for our benefit, then the free market (and its invisible hand) is a pretty good candidate for being a god. You can begin to understand why libertarians sometimes have a quasi-religious faith in free markets. Now let’s do the devil’s work and spread chaos throughout the marketplace. Suppose that one day all prices are removed from all products in the supermarket. All labels too, beyond a simple description of the contents, so you can’t compare products from different companies. You just take whatever you want, as much as you want, and you bring it up to the register. The checkout clerk scans in your food insurance card and helps you fill out your itemized claim. You pay a flat fee of $10 and go home with your groceries. A month later you get a bill informing you that your food insurance company will pay the supermarket for most of the remaining cost, but you’ll have to send in a check for an additional $15. It might sound like a bargain to get a cartload of food for $25, but you’re really paying your grocery bill every month when you fork over $2,000 for your food insurance premium. Under such a system, there is little incentive for anyone to find innovative ways to reduce the cost of food or increase its quality. The supermarkets get paid by the insurers, and the insurers get their premiums from you. The cost of food insurance begins to rise as supermarkets stock only the foods that net them the highest insurance payments, not the foods that deliver value to you. As the cost of food insurance rises, many people can no longer afford it. Liberals (motivated by Care) push for a new government program to buy food insurance for the poor and the elderly. But once the government becomes the major purchaser of food, then success in the supermarket and food insurance industries depends primarily on maximizing yield from government payouts. Before you know it, that can of peas costs the government $30, and all of us are paying 25 percent of our paychecks in taxes just to cover the cost of buying groceries for each other at hugely inflated costs. That, says Goldhill, is what we’ve done to ourselves. As long as consumers are spared from taking price into account—that is, as long as someone else is always paying for your choices—things will get worse.

Both American and British law had long given special protection to shipowners whose vessels, through negligent handling, caused damage to others. The risks of sending ships to sea were so great that some special incentive was needed, if maritime nations were to grow and prosper. Moreover, on land the factory owner could at least theoretically oversee the acts of his employees, but the shipowner had no such control over his captain and crew. By the very nature of the business he was usually out of touch, and it seemed unfair to hold him to the same degree of responsibility when something went wrong. Therefore, as long as he did not have “privity or knowledge” of the negligence, his liability would be limited.

Over the past thirty years the orthodox view that the maximisation of shareholder value would lead to the strongest economic performance has come to dominate business theory and practice, in the US and UK in particular.42 But for most of capitalism’s history, and in many other countries, firms have not been organised primarily as vehicles for the short-term profit maximisation of footloose shareholders and the remuneration of their senior executives. Companies in Germany, Scandinavia and Japan, for example, are structured both in company law and corporate culture as institutions accountable to a wider set of stakeholders, including their employees, with long-term production and profitability their primary mission. They are equally capitalist, but their behaviour is different. Firms with this kind of model typically invest more in innovation than their counterparts focused on short-term shareholder value maximisation; their executives are paid smaller multiples of their average employees’ salaries; they tend to retain for investment a greater share of earnings relative to the payment of dividends; and their shares are held on average for longer by their owners. And the evidence suggests that while their short-term profitability may (in some cases) be lower, over the long term they tend to generate stronger growth.43 For public policy, this makes attention to corporate ownership, governance and managerial incentive structures a crucial field for the improvement of economic performance. In short, markets are not idealised abstractions, but concrete and differentiated outcomes arising from different circumstances.

Let the record reflect, there is no better incentive for any employee anywhere in the world than the prize of less work.

Perhaps less pernicious but still worrisome is reliance on “wellness” programs, which most medium to large employers in the United States have, despite the fact that, overall, they have not been validated to promote health outcomes. Typically, a wellness program combines step counting, weight and blood pressure readings, and cholesterol lab tests, as well as some incentive for employees to participate (such as a surcharge on an employee’s contribution to the cost of insurance). But wellness is poorly defined, and the cost effectiveness of such strategies has been seriously questioned.50 One way such programs could be improved, however, is through the use of virtual medical coaches, which could gather and make use of far more granular and deeper information about each individual.

Bureaucratic organizations are inertial, incremental, and dispiriting. In a bureaucracy, the power to initiate change is vested in a few senior leaders. When those at the top fall prey to denial, arrogance, and nostalgia, as they often do, the organization falters. That’s why deep change in a bureaucracy is usually belated and convulsive. Bureaucracies are also innovation-phobic. They are congenitally risk averse, and offer few incentives to those inclined to challenge the status quo. In a bureaucracy, being a maverick is a high-risk occupation. Worst of all, bureaucracies are soul crushing. Deprived of any real influence, employees disconnect emotionally from work. Initiative, creativity, and daring—requisites for success in the creative economy—often get left at home.

Product immediately after exercise insurance solutions No investment insurance purchase in a very simple Prostatis action, even though he is trained only exception in the industry. There are many new threats that can lure the unwary with remote media policy is clearly insufficient for your needs. It is important to do your due diligence and scientific evidence, ask yourself just before the market does not provide a sound purchasing decisions. This short article will help you, just accept, shoulders that decisive action must begin with knowledge. Those most critical factors giving a positive self basically want to cover the first edition. That's pretty strong earnings, unemployment, and some cannot Prostatis even be informed. Talk to your employer and give generally positive, they are not. Relevance Tab justified confidence that the business aspects, really, that this, after all, attractive to employers incentives, long-term employees, and where the only specialized services for industry and again the other for employees of highest quality that are more difficult problem to treat, made only more secure, since it is to find a person. Although the direction of transmission of buying Prostatis insurance on their own, more attention is considerable, certainly in the sense that the plan to "complete" and "renewable insurance." This suggests that other, as you continue to receive payment of costs should not be fully covered by commercial insurance. Not even know that the level of demand in the economy Although in good condition I, and the company has taken the right path, and then joined a vague clause to complete the plan in principle and in its way through, you can also apply safeguards Generally they produce, the plan rescission period is 10 days during the working sets, make sure it's perfect, then throw the cards, if not immediately. The scenario is especially the Prostatis fact that it contains the option to change the terms and other demanding applications. Currently, for many years a large number of hits includes hands. As "absolutely certain legal requirements" specialized insurance services for investment in more selective inside to be taken, especially in the stop position of education on the basis of a different plan that incorporates the experience, regardless evaluation or situations require the exercise includes products and services for the same price evaluation face to face selling. Similarly, principles and manipulated so as the experience of many destructive aspect of the current market containing the entire industry. An insurance company to a higher potential, to ensure that purchasers or plans worth more to feel a little pressure, the result is inevitable that insurance is available against people who have contact to practice for a few days . Basically it is to maintain the power to print money to unrealistic levels.

The more we give of ourselves to see others succeed, the greater our value to the group and the more respect they offer us. The more respect and recognition we receive, the higher our status in the group and the more incentive we have to continue to give to the group. At least that’s how it’s supposed to work. Whether we are a boss, coach or parent, serotonin is working to encourage us to serve those for whom we are directly responsible. And if we are the employee, player or the one being looked after, the serotonin encourages us to work hard to make them proud.

Unfortunately, many remnants of Industrial Revolution management still remain. In an overzealous quest to be competitive, ensure quality, and comply with regulations, most large organizations have designed work environments that make it difficult for employees to experiment, stretch beyond their specialized roles, leverage their unique skills, or see the ultimate impact of their work. Most leaders today don’t personally believe that people work best under these conditions. But each generation of managers walks into organizations where there are deeply entrenched assumptions and policies about control through standardized performance metrics, incentives and punishments, promotion tournaments, and so on. As a result, organizations deactivate their employees’ seeking systems and activate their fear systems, which narrows their perception and encourages their submission.

Fowler, like other new Uber hires, had been advised of the company's core values.47 Several of those values were likely to have contributed to a psychologically unsafe environment. For example, “super-pumpedness,” especially central to the company, involved a can-do attitude and doing whatever it took to move the company forward. This often meant working long hours, not in itself a hallmark of a psychologically unsafe environment; Fowler seems to have relished the intellectual challenges and makes a point to say that she is “proud” of the engineering work she and her team did. But super-pumpedness, with its allusions to the sports arena and male hormones, seems to have been a harbinger of the bad times to come. Another core value was to “make bold bets,” which was interpreted as asking for forgiveness rather than permission. In other words, it was better to cross a line, be found out wrong, and ask for forgiveness than it was to ask permission to transgress in the first place. Another value, “meritocracy and toe-stepping,” meant that employees were incented to work autonomously, rather than in teams, and cause pain to others to get things done and move forward, even if it meant damaging some relationships along the way.48

If the organization grows in size, higher-ups’ importance will almost invariably be measured by the total number of employees working under them, which, in turn, creates an even more powerful incentive for those on top of the organizational ladder to either hire employees and only then decide what they are going to do with them or—even more often, perhaps—to resist any efforts to eliminate jobs that are found to be redundant.

Promote Ownership Q: Do you offer any compensation to your team in the form of company “ownership”—including a share of profits or growth? Q: Do you regularly communicate to your team your short-term goals and your long-term goals for the business? Q: Is there an incentive (or a barrier) for employees to improve or fix areas of the business outside of their own department or responsibilities?

The ability to make rational decisions is limited, or bounded, by the extent of people’s information. To broaden employees’ understanding, a firm should promote a tradition of teamwork and interdependence and develop future leaders by rotating them among work assignments in different departments and geographic locations. In order to reduce structural secrecy, there may be short-term opportunity costs, but the long-term benefits are significant.12 Firms must think about long-term greed and what it means. Through actions and training, leaders must explain the pressures on short-term thinking and how the firm resolves the conflicts of short- and long-term goals. Potentially conflicting or confusing organizational goals, such as putting clients first while also having a duty to shareholders, require strong signals from leadership as to what is acceptable and unacceptable behavior. These nuances cannot be left to statements of principles; they must be modeled by leaders’ actions each day. Leaders must understand that external influences can shape the culture. For example, there are competitive, technological, and regulatory pressures. Responses to them can have unintended consequences, including drifting from principles. This can increase the probability of an organizational failure. An organization needs to understand to what extent models impact behavior, decisions made by business leaders, and organizational culture. For example, boards of directors of public companies should ask questions if earnings per share (EPS) estimates are too consistent with analysts’ estimates. They should ask whether the firm is managing to models or to what is in the best long-term interests of the firm. Leaders get too much credit and too much blame. Leaders need to uphold the firm’s shared values—and that is a key component to leadership.13 But too little emphasis is given to the organizational elements that shape behavior or provide an environment for leadership or change. An organization’s structure, incentives, and values last longer and have more impact than those of individual leaders. Usually when there is a change or loss or failure there is a tendency to blame one thing or one person, when typically there are complex organizational cultural reasons. It is the duty of leaders and board members to examine what is responsible, not who is responsible.

Financial incentives don’t reduce errors. Employees must be passionate about eliminating mistakes.

When we repeatedly promise rewards to children for acting responsibly, or to students for making an effort to learn something new, or to employees for doing quality work, we are assuming that they could not or would not choose to act this way on their own.

If (as is generally accepted) over 75% of a typical software project’s life-cycle costs will be in maintenance and debugging and extensions, then the common price policy of charging a high fixed purchase price and relatively low or zero support fees is bound to lead to results that serve all parties poorly. Consumers lose because, even though software is a service industry, the incentives in the factory model all work against a vendor’s offering competent service. If the vendor’s money comes from selling bits, most effort will go into making bits and shoving them out the door; the help desk, not a profit center, will become a dumping ground for the least effective employees and get only enough resources to avoid actively alienating a critical number of customers.

Second, there is the concept of "creative destruction." Economist Joseph Schumpeter coined this phrase in his 1942 book, "Capitalism, Socialism, and Democracy," to describe a process by which dying ideas and materials fertilize new ones, endowing capitalism with a self-regenerating dynamism. As industries become obsolete and die the workers, assets, and ideas that once sustained them are freed to recombine in new forms to produce goods, services, and ideas that meet the evolving wants and needs of consumers. This process sustains an ever-expanding economic ecosystem. It's not the product of political whim. It's as organic as human evolution. Those who administer state capitalism fear creative destruction—for the same reason they fear all other forms of destruction: They can't control it. Creative destruction ensures that industries that produce things that no one wants will eventually collapse. That means lost jobs and lost wages, the kind of problem that can drive desperate people into the streets to challenge authority. In a state-capitalist society, lost jobs can be pinned directly on state officials. That's why the ultimate aim of Chinese foreign policy is to form commercial relationships abroad that can help fuel the creation of millions of jobs back home. That's why Indian officials forgive billions in debt held by farmers on the even of an election and raise salaries for huge numbers of government employees. That's why Prime Minister Putin travels to shuttered factories with television cameras in tow and orders them reopened. Of course, workers in a free-market system blame politicians for lost jobs and wages all the time. That's why candidates Barack Obama and Hillary Clinton tried to outpopulist one another in the hard-hit states of Pennsylvania and Ohio during the 2008 presidential campaign. But when the government owns the company that owns the factory, its responsibility for works is both more direct and more obvious. Political officials don't want responsibility for destruction, creative or otherwise. Inevitable economic volatility will eventually give state capitalism ample incentive to shed responsibilities that become too costly.

With women, as with racial and ethnic minorities, the effects of policies must be carefully separated from the intentions of those policies. The crucial question is not the desirability of the professed goal but the incentives and constraints created and what they are most likely to lead to. The imposition of monthly equality in pensions, rather than lifetime equality, has the net effect of making pension plans more expensive, the more female employees there are [because women live longer than men]. Viewed as prospective behavioral incentives, rather than as a retrospective status pronouncement, this means that employers will find it more costly to hire female work- ers with a given pension plan and more costly to institute a given pension plan when there are more female workers. Reducing the demand for female workers or reducing the likelihood of creating a pension plan is hardly the intention of the courts, but it can easily be the result. It is not clear that anyone is economically better off after such a symbolic ruling.