Monetary Rewards destroy relationships between people

In today’s world modern companies try to create environments where cooperation is a must between employees and departments. Alfie Kohn, in his book Punished by Rewards, goes further and states: “Cooperation does not just make tasks more pleasant; in many cases, it is virtually a prerequisite for quality”.

Companies start to realize that having well-functioning teams, in which knowledge, resources and skills are shared and exchanged is a safe recipe for excellence. Even if companies realize that a team work is the solution, they still have a process in place that reinforce individual work over team work. Focusing on individual rewards will give the impression that organization´s effectiveness is simply the sum of individual performance, whereas there is plenty of books, which already proved that a team is much more than the sum of individuals.

Having people fighting for their individual rewards will create an environment where collaboration will not be present.
After all, who will stop helping others when this would put my ability to get my reward in risk.

Alfie Khon tells us that this rivalry is even worse when people fight for a reward that not everyone can get. Imagine a price that is given only to the best person in a team or in a department. In this situation, you will have a bunch of people fighting with each other to get the price. Each person will perceive the other with suspicion and hostility. This is explained in details in the book No Contest from Alfie Kohn.

At this point, you might think this issue is easily solved substituting individual rewards for team rewards, however this is not that simple. Paul C. Jordan shows in his article: “Effects of an Extrinsic Reward on Intrinsic Motivation: A Field Experiment”, that shifting individual rewards to team rewards only shifts the problem to a different level within the organization. Instead of individual competition, we will have teams competition.

Another problem with moving to a collective award approach is the fact that this can be used as a manipulative strategy to control a full team. In this situation, there will be a huge peer pressure instead of an environment, in which everyone is concerned about the well-being of others. This can be studied in details in the paper of Peter Balsam and Andrew S. Bondy “The negative Side Effects of Rewards“.

So far, I only discussed relationships between peers. But there is another dimension, relationship between the person who gives the reward and the one who gets it. Bruce Posner in his article Pay for Profits refers that “the principal basis for compensation is the boss whim, the only real incentive is to stay on his good side”.

The relationship between manager/boss/mentor should be something that would allow the mentoree to grow. As already explained, when rewards and incentives are present, the relationship shifts to something else. We all were in a situation, in which we did not get the bonus that we expected and I guess we all still remember how the relationship got broken after that. I finish this blog post with a quote from Alfie Kohn´s book Punished by rewards.

This blog post is part of my new book that I am writing: Get Rid of Performance Reviews, if you are interested in the topic please subscribe as a Beta Reader and receive the 1st part for free right HERE.

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Leave a Comment

  1. Reply

    Hi Luis,

    Just wondering how you are progressing with this book as this is an issue at my current work that I would very much like to get moving on. I am looking for good alternatives to the performance review and would like to work towards that with others, so keep me posted.


  2. Reply

    Luis – You’ve done a solid job of summarizing the literature. The one area that might show a different/viable approach is Prosocial Bonuses: – have you looked into this? Its effectively what Richard Sheridan has been doing at Menlo Innovations or for that matter Ricardo Semler.


    • Reply

      Hi Mark, sorry for not answering before but I did not realise that I had your comment. Thanks for your comment, to be honest I did not look into it but I want to look into what Menlo and Ricardo Semler did. I have his book and I am trying to reach him out for my next book :) Thanks, Luis

    • Jakob Carlsen
    • June 17, 2014

    Hi Luis

    I am working as a Software Development Manager i Denmark and have been manager and teamlead for large and small develoment teams for more than a decade. I am Certified Scrum Master and Product Owner, though I must admit that I have never really build an ideel scrum team – my bad most likely.

    Your blog post caught my eye as I am fully agreeing to your observations – performance appraisals destroys the good habbits, ruins cooperation and creates an ackward relationship between the manager and the employee. What is even worse then it tends to make people break reasonable processes and act directly silly in order to achieve their goals.

    Let me just list two examples from the real world:
    Top management made that amount of story points burned in a scrum team into an incentive for all scrum teams, which quickly inflated all the estimates and made all estimates worthless.

    Development management made it a KPI linked to incentives that methods in Java classes must be kept below 50 lines of code … leading to 50 very long lines of code that was impossible to read and understand.

    On top of it as you claim above – it makes people stick with their ideas and prevents that through cooperation you can make 1+1 add up to 3 – both on individual and team level. All my observations over the years supports your viewpoints.

    Best regards
    Jakob Carlsen

      • Luis
      • June 17, 2014

      Thank you so much for your comment :) Your real world examples do not shock me at all :)

      These kind of measures from management are quite normal, unfortunately they do not have any clue about they are asking and of course they will be cheated and even worse they will create a chaotic system inside companies…


  3. Reply

    Hi Luis, interesting post and very related to a TED Talk I’ve watched recently. If you haven’t I very much recommend:

      • Luis
      • June 6, 2014

      That is a classic :)

      I did read all his books and I invited him to Participate on my next book as well :)

      Subscribe to the mailing list, i think you will like it:


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