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Online Nuggets: When Bonuses Backfire

As Marc Andreessen notes on blog.pmarca.com, creating a good incentive program is easier said than done. The Netscape co-founder now runs Ning, a Palo Alto, California, company that provides the technology for small social networks.
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"As a company grows, stock options and other forms of equity-based motivation become less and less useful as an incentive tool, since it becomes harder for many employees in a large company to see how their individual behavior would have any effect on the stock price of the overall corporation. So, more tactical incentives kick in, such as cash bonuses....The most significant thing to keep in mind is that how the goals are designed really matters. People tend to game any system you put in place, and then they tend to rationalize that gaming until they believe they really are doing the right thing."




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