American taxpayers, struggling to make ends-meet, balk at the notion of multimillion dollar bonuses and golden parachutes. Who can blame them? Bonuses were once a marvel, something worth aspiring toward –something earned. But incentives –and bonuses –often don’t just fail, but backfire. Writing at Business Week, Barry Schwartz notes that when incentives are offered, it often eliminates the moral dimension to decision making. For example, researchers found that when Israeli day-care centers fined parents for being late to pick up their children, lateness increased. When offered a token for assistance with moving furniture, people are less likely to help than if they had been offered nothing.
“The question they ask themselves,” Schwartz writes, “when money isn’t part of the equation is quite different: ‘What are my responsibilities to my country and to other people?’ Despite our abiding faith in incentives as a way to influence behavior in a positive way, they consistently do the reverse.” As far as reform of the financial industry is concerned, Mr. Schwartz suggests compensation over incentives.
Check out the article here.
No comments:
Post a Comment