Do Bonuses Really Work?

Following a general trend in society and, specifically, a practice held up as productive in for-profit world, our advancement profession has been overrun in recent years with examples of bonuses for exemplary efforts.  Sounds like a simple and logical proposition.  “Let’s reward the folks who are doing the best work!”  But, there is a basic question that doesn’t get asked very often.  Namely do bonuses actually work?  Do they, in fact, lead to the desired results of increasing productivity and results over time?

I’m not so much concerned with the specific application of how bonuses are provided.  Whether you have 5 quantitative measures being tracked, or 8, or whether you give out bonuses based on some other subjective criteria. However they might be awarded, I’m asking if they work.

Alfie Kohn’s comprehensive book, “Punished by Rewards,” is a text every leader should read.  He draws from research with children, teens, and adults, in a variety of fields, including education, child-rearing, and business.  He tells one story which is succinctly powerful in helping to answer the question of whether bonuses work.

An elderly man is harassed and ridiculed by a group of 10 year old boys each day on their way home from the school bus stop.  Each afternoon, the boys jeer the man as they pass by his front yard telling him how old, fat, and bald he is.  One afternoon as the boys pass, he announces that any boy who comes to his yard the next day and ridicules him will receive a dollar.  The boys are wildly excited!   This is a great deal they say!

On cue, the next afternoon, the boys stop by his home and holler epithets for all they are worth.  He gladly hands them each a dollar. Then he states that if they do the same tomorrow, he will pay them again.  But this time, it will be 25 cents.  The boys still think that’s a pretty good deal and so, the very next day they show up again to cat call.  He pays them each 25 cents.

As he giving each boy his quarter, he announces that from then on, he will only be able to pay them one cent for their trouble.  “Forget it!” the boys cried, “It’s not worth it!”  And they never came back to hassle him again.

This story is cute, but its lesson rings true.  More importantly, the research in this area is clear.  When we provide extrinsic rewards for an activity – such as bonuses – we lessen the intrinsic motivation to participate in that activity.  Put another way, when we say, “Do this and you’ll get that,” the “this” always gets diminished and the “that” becomes the focus of our efforts.  Just like the boys who heckled the elderly man lost the “fun” of harassing him, when we introduce bonuses for “good work,” we lose the joy of doing that very work.  Instead, our focus becomes achieving the bonus or reward and the work becomes secondary (or worse).

Bonuses do work.  But only to incentivize the seeking of more bonuses.  And strengthening a “culture of philanthropy” (to use a phrase in favor today) will not be achieved through the seeking of more bonuses.  Just as the ubiquitous executive bonus in business has not produced a strong economy.  Good advancement work is never about the money.  Money is a consequence, a by-product of our real work.  For example, a donor’s gift is a result of our work with them, not the work itself.  When we make the mistake of focusing the attention of our team members on the money, we do great harm to the very “culture of philanthropy” we claim to be building.

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