Business Management: Employee Incentives or Punishment?

It’s a Fallacy That Threats Improve Employee Productivity

A chain of waxing salons develops employee requirements to sell an almost impossible amount of products to customers and to wax an almost impossible number of customers per day. This puts employees under high stress to meet requirements that are unreasonable. In addition, the chain constantly threatens to fire employees who fail to meet quotas. Even employees who do well week after week and happen to have an off-week or two are threatened. It seems that business management believes this will improve employee productivity. However, this way of thinking is counterproductive because people tend not to do their best under threat.

This kind of threatening business management strategy happens at all levels. Managers, technical people and professionals of all kinds who work in corporations often are trapped in a corporate culture that has threat of firing or lay-off as a constant underlying atmosphere. It is assumed that employees will work regular overtime with no recompense. Those who cannot do this because of family obligations or who don’t buy into the idea that their whole lives should be given to work are often pushed out. This increases the stress and fear in those still employed. Stress and fear does not improve productivity.

Parental Punishment and Threats Fail to Produce Children’s Best Behavior

The reality that punishment and threat of punishment fails to improve productivity begins in childhood. Children whose parents threaten them with punishment or attempt to induce positive behavior through punishment often have three choices-(1) they acquiesce because they’re smaller and less powerful, but they only do the minimum required by their parents; (2)they rebel and fight their parents every step of the way, enduring more and more punishment. Certainly, they fear their parents, but they also don’t respect them. Or (3) they might pretend to acquiesce but frequently “forget” to do their chores or secretly sneak out at night when their parents are sleeping, or children learn to manipulate their parents in other ways.

The same often is true between employers and employees. Business management whose strategy is to attempt to improve productivity through threats-of firing or layoffs-only succeed in scaring their employees and creating a situation where they and their employees are adversaries. Why would an employee want to do his best when he is constantly under threat? Not only does the stress undermine confidence and energy, but lack of reward or anything positive to look forward to undermines motivation.

Creating a Feeling of Community is Better for Business Management

Threat of punishment or loss of jobs creates a lack of a sense of safety and employees are actually unable to work at their best. A sense of safety is one of our basic needs. Common sense tells us that when employees feel safe, when they feel trusted and validated for their work, their productivity will improve. Collaboration between employers and employees toward a mutual goal creates a feeling of community and belonging, of working together that makes people want to do their best. This sense of community and belonging also frees people’s creativity, which in turn is useful for innovation. Recognizing and rewarding employees for good work increases their motivation to continue doing good work. For example, the chain of salons above could get much more out of their employees by recognizing workers who sell the greatest number of products, by giving these people raises or commissions on what they sell and by providing sales training for employees or suggesting ways to work more efficiently. There’s no need for a concomitant threat of punishment for those who sell less, because each person will automatically attempt to do their best.

About

The fact that I am a licensed psychotherapist with many years experience is very useful in my work with organizations and businesses. I focus on the “people problems” in organizations-the extent to which interpersonal relations, communication and group dynamics of the organization hinder effective and efficient functioning. I work with organizations through:

*Executive and management coaching
*Effective people management
*Team facilitation
*Conflict facilitation and mediation, and conflict resolution trainings
*Training and coaching to develop clear, direct communication
*Clarifying vision and mission
*Clarifying roles and procedures