Last Updated Dec 7, 2007 3:15 PM EST
A lot of employers put too much stress on money as an incentive and not enough on fun. They often don't realize just how much their employees need to feel in control of their own destiny. But these are very common mistakes, and they usually arise because the employer himself or herself has a great need to feel in control. That's often counter productive, and people rebel against it.If fun is a primary motivator, how about those annual bonuses to spur performance? Should managers forget about them entirely? Cowan argues that rather than forgo bonuses, employers need to make sure they're done right.
These incentives need to be framed the right way, accompanied with the right signals; like meetings, they are an act of social theater... People have to know why they received the incentive they did, what it means in terms of their broader status in the workplace. Framing it the wrong way, for example, would be penalizing somebody without saying what they are doing right. Negative signals are much more likely to be heeded when bundled with something positive.
A common problem with bonuses, however, is people often feel, rightly or wrongly, that they are used to reward favorites. If they are perceived that way, they are probably counter-productive.Though the interview is full of insights for managers, Cowan also applies the art & science of economic incentives to a wide range of situations from a pain-free trip to the dentist to why schools are often so dreary for students (hint: it's all about the funding). Also check out Cowan's blog Marginal Revolution.