A Bad Rap On Incentives

 

The January edition of INC. featured our annual cover story on "The Hottest Entrepreneur in America," but -- hot though he may be -- the article didn't generate nearly as many sparks as the Managing People column in the same issue, "Incentives Can Be Bad for Business," in which author Alfie Kohn cautioned against the pitfalls of tying rewards to performance. Some readers thought his warnings absurd.

Do incentives lead employees to focus narrowly on particular goals? Of course. That is their intent. Do they eliminate the need for effective management aimed at achieving those goals? Absolutely not. Well-planned incentives are designed to supplement, not replace, the efforts of management. Incentives are inherent in America's corporate culture. What is basic compensation, after all, but reward for work? Bonuses are rewards for outstanding work. And incentives are rewards for truly exceptional work toward goals that have been targeted in advance by management. What's more, incentives work.

Mr. Broudy's response was positively restrained compared with that of another reader, In Search of Excellence author Tom Peters. To find out what Peters had to say, and how Kohn responded, turn to page 80.