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Removing Bonuses to Make Room For Business Improvement Solutions

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Often, the best source for new ideas in an organization are the employees themselves. But according to author Matthew May, management should never give rewards for innovation.

The opening of his article summarizes the theory:

I am constantly asked how to best structure a financial reward system in an effort to motivate people to contribute ideas and improvements. My answer: Just say no.

Combined research from the Employee Involvement Association and Japan Human Relations Association reveals that the average number of ideas submitted per employee annually is 100 times greater in Japanese companies than in U.S. companies. Why? For one thing, we reward the wrong thing in the wrong way. The average reward in Japanese companies is 100 times less than the average U.S. reward of nearly $500. We have it backwards!

In a nutshell: payment for ideas can defeat the purpose.

The ramifications of this extreme proposal have far-reaching effects. The employee who provides exceptional work will often find the announcement demoralizing. The accountant handling the budget will likely be pleased by the reduction of unplanned expenses. Some managers will be frustrated by their inability to reward employees, while others will smugly insist all the best ideas come from themselves anyway. A policy opposing payment for ideas would fundamentally alter the core culture of many organizations.

So why does Matthew May argue against bonuses for good suggestions? Because it attempts to measure what cannot be measured, and value what cannot be fairly evaluated. It establishes an environment of expectation, not one where people are constantly looking for ways to improve without external motivation. The desire to do more should be intrinsic—it should come from within. As May quips: “[We should] not attempt to light a fire under people, [but] light the fire within them.”

business improvement solutions

© Flickr user 401(K) 2013

Bonuses for innovation stem from an obsession with measurement, a topic The Methodology Blog covered. Studying figures and exercising control sometimes drives process beyond practical benefit. Since we are monitoring output, we assume that we need to compensate according to results. But this logic is flawed. Consider the story of an intern who came up with a million dollar idea. He was already being paid for his job, which is mostly to think up interesting ideas. Paying him twice makes it seem like the compensation is the most important part. According to Joel Spolsky, the intern’s supervisor:

The very act of rewarding workers for a job well done tends to make them think they are doing it solely for the reward; if the reward stops, the good work stops. And if the reward is too low, workers might think, Gosh, this is not worth it. They will forget their innate, intrinsic desire to do good work.

At AccelaWork, we do not provide management consulting. So why do we care about how organizations structure their compensation systems? Because it impacts individual motivation to conduct and improve the process of work. Methodology engineering is best conducted by the stakeholders themselves because they fundamentally believe in continuous improvement.

If you’re an employee and you are offered something extra for a job well done, consider something radical: refuse to accept that bonus. Tell your manager that you want to be motivated not out of fear, greed or expectation, but out of a personal desire to contribute. Light a fire within yourself, not one beneath you or one to run toward. Get excited about working hard for the sake of hard work itself.

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