President Obama said, "I'll ultimately be judged on my performance." Yes, he will. Two years ago Obama said "if pay for performance works," but never researched the answer He could call Alfie Kohn, who highlights America's Skinnerian world of punishment/reward and its concomitant dysfunction. Kohn points out our society's three decade period of denial. In spite of a track record of long term failure, President Obama floors the P4P pedal for education and health care.
I judge Obama a "no learner." Money is not people's primary motivator. It ranks 5th or 6th on a list of workplace attributes. Money becomes a dissatifier, when it is too little. It's also an indicator of poor working conditions, a bad boss, inadequate staffing. lack of teamwork. In effect: "You can't pay me enough to do this job."
Rewards don't work. They punish. Fear and scarcity are the primary foundation of reward/punishment systems. These encourage individual compliance, not creativity and collaboration. Once received, the absence of reward feels like punishment.
Rewards rupture relationships, especially incentives offered competitively. Artificial scarcity turns people into winners and losers, with concomitant bad feelings. Scarcity and losing applies at a collective level, be it a department, division or organization.
"If you want people to do a good job, give them a good job to do."-- Edwards Deming
"Pay people well, pay people fairly, and do what you can to put money out of their minds."--Alfie Kohn
The Hidden Costs of Rewards by Doug Jenkins described 28 studies on financial incentives for simple tasks done in a short time frame. Only 5 of the 28 looked at the quality of the work. No study showed a positive impact of financial incentives on quality. Those results were compiled in 1978. Thirty three years later, the Obama team can't find it. Surely a copy sits in the Library of Congress.
Corporate board rooms produced the most pure incentive compensation, stock options. Nearly 30% of executives cheated by backdating stock option grants, i.e. stealing from shareholders. This was a widespread practice over a decade. What kind of person, already handsomely paid, cheats or steals to get more? Wealth addicts.
Wealth addicts pretend money is the only valuable thing in life. They do so to feel better about their addiction, their insatiable quest for more. What if money junkies had President Obama's ear, even wrote policy? How might that distort things?
"Pay for performance is a toxic daisy chain."--Dr. Don Berwick.
As Obama's Medicare Chief, Berwick is charged with implementing a Rube Goldberg P4P scheme. One word summarizes the effort, complexification. Rewards are effective for getting temporary compliance for simple work within the control of an individual. Add complexity, interdependence, creativity, problem solving, and higher order decision making and rewards fail. In health care, which is highly interdependent, competitive incentives are guaranteed to suboptimize. Berwick cited how a Houston hospital refused to share a clinical breakthrough to retain "competitive advantage."
Toxic daisy chain. One failure of a theory requires its review and modification. Taking pay for performance off its pedestal is long overdue.
Obama had the answer before his very eyes and couldn't see it in healthcare. Hold the Mayo...
Update 9-28-13: Billionaire Bill Gates proved his No Learner status with his education schemes which focus on extrinsic motivation and giving more work to "star performers". I suspect Alfie Kohn is smiling somewhere. What's missing? Profound knowledge.
Update 9-29-13: AJC reported Alfie Kohn "blames former President George Bush and President Barack Obama, along with Bill Gates and corporate America, for creating a compliance-driven, test-fixated education system under a mantra of global competitiveness and accountability." Besides killing kids and teachers intrinsic desire for learning, extrinsic motivation schemes result in widespread cheating. Atlanta Public Schools know this well.
Update 4-20-14: Chicago crime statistics were fudged under Mayor Rahm Emanuel, a longtime proponent of extrinsic motivators. The "drop" puzzled Chicago citizens and police officers.
Update 6-15-14: The Veterans Administration experienced the widespread harm of extrinsic motivators and exhorting people to meet a waiting time standard with no method. The crime is that of management in implement reward systems that distort behavior.
Update 11-28-14: It seems the propensity to cheat within extrinsic reward systems grows as the potential cheater is disgusted. It's not clear how healthcare workers, with a very high disgust threshold, are impacted.