Should Salaries and Incentives be linked with Performance?

When the spiritual teacher and his disciples beganrocket scientist once told me that all rocket scientists
their evening meditation, the cat who lived in theare earthlings like you and me. They wear their pants
monastery made such noise that it distracted them.just like we do, one leg at a time. If telling a rocket
So the teacher ordered that the cat be tied upscientist or any other professional his work
during the evening practice.expectations is wrong, then P.E. is also wrong. If
Years later, when the teacher died, the catgauging the work of the person based on the
continued to be tied up during the meditation session.expectations is wrong, then certainly the incentive
And when the cat eventually died, another cat wassystem is insulting.Most Performance review
brought to the monastery and tied up. Centuriesprograms are copied from a Dilbertesque
later, learned descendants of the spiritual teachermanagement book where the first stage is an
wrote scholarly treatises about the religious"anonymous" upward reviews, followed by optional
significance of tying up a cat for meditation"self-evaluation" forms. Finally there is a numerical
practice.The traditional view in organizations hasscore, in lots of non-scalar categories like "works well
always been to link Salaries and incentives towith others", from 1-5, where the only possible
Performance. And I wanted to question this tradition.scores were actually 3 or 4.I fully agree that rating
Every good company in this world has a performancebetween 1-5 or 1-100 is a silly thing. One of the best
evaluation (P.E.) system. Salaries are linked to this P.E.things I like about the software industry is the fact
. Even incentives such as extra training, monetarythat everything is represented in binary. i.e. 0 or 1. In
bonuses, freebies are given to the best performers.my view all evaluations should be similar. The only
Joel Spolsky confirmed my theory that P.E. shouldtwo possible scores are 0 (no) or 1(yes).
not be conducted.In April,2000 Joel wrote a beautifule.g. How is his quality of code? - 0 if it is bad 1 if it is
article - Incentive Pay Considered Harmful. I visitgood.For many this concept may seem harsh. In my
Joel's site, joelonsoftware.com, regularly and loveentire career I have seen that we either win or loose.
reading his articles.i.e. 1 or 0 is a reality of life. When I used to handle
These are the main points highlighted in thisthe sales in our company, many a times I had faced
wonderful article -Treating your rocket scientista situation where Poornam/Bobcares would be made
employees as if they were still in kindergarten is notto compete with 3 or 4 other providers. In the
an isolated phenomenon. Almost every company hasbeginning I used to think "Oh, we just missed it. Our
some kind of incentive program that is insulting andquote was second best, we did well". Then I realized
demeaning.being second best does not allow us to grow or
Most Performance review programs are copied fromhave the best people. One has to be win or
a Dilbertesque management book where the firstloose.The system never took into account the fact
stage is an "anonymous" upward reviews, followedthat people have different and unique talents, all of
by optional "self-evaluation" forms. Finally there is awhich are needed for a team to work well such as a
numerical score, in lots of non-scalar categories likeperson who motivates everyone else when the going
"works well with others", from 1-5, where the onlygot tough or someone who is incredibly insightful
possible scores were actually 3 or 4.The systemstrategically.
never took into account the fact that people haveLet's take the example of the Athletics Coach again.
different and unique talents, all of which are neededSuppose he was training a team for a 4x100 meters
for a team to work well such as a person whorelay. Would it help if 3 were great sprinters and the
motivates everyone else when the going got toughforth was slow but did a great job by keeping the
or someone who is incredibly insightful strategicallyothers happy by singing. I guess that team would
Negative reviews, obviously, have a devastatingnever make it to the top. Maybe the coach could hire
effect on morale. In fact, giving somebody a reviewa singer to keep them happy.It is true that gauging
that is positive, but not as positive as that personjust one quality is bad. For example if "lines of code"
expected, also has a negative effect on morale.Theis the only criterion for judging a person then the
effect of reviews on morale is lopsided: whilesystem is wrong not the concept. One has to review
negative reviews hurt morale a lot, positive reviewsall the qualities that are needed for the job.Negative
have no effect on morale or productivity.reviews, obviously, have a devastating effect on
Most people will be disappointed by their reviewsmorale. In fact, giving somebody a review that is
because most people think that they do pretty goodpositive, but not as positive as that person expected,
work (even if they don't). It's just a little trick ouralso has a negative effect on morale.The effect of
minds play on us to keep life bearable.reviews on morale is lopsided: while negative reviews
Incentives (or bribes) simply can't work in thehurt morale a lot, positive reviews have no effect on
workplace. It leads to teamicide: the inadvertentmorale or productivity.
destruction of jelled teams.Most people will be disappointed by their reviews
Giving somebody positive reinforcement (such asbecause most people think that they do pretty good
stupid company ceremonies where people getwork (even if they don't). It's just a little trick our
plaques) implies that they only did it for the luciteminds play on us to keep life bearable.
plaque; it implies that they are not independentPerformance Evaluations would definitely make the
enough to work unless they are going to get aunder performers sad. They have two choices - they
cookie; and it's insulting and demeaning.can either quit or improve. If they quit it is good for
For 5 years I believed very word of what Joel said.the organization. And if they improve it is great for
I even made sure that we do not have any stupidthe organization as well as the individual.Incentives (or
company ceremonies or have any performancebribes) simply can't work in the workplace. It leads to
evaluations in Poornam. I even sat down to writeteamicide: the inadvertent destruction of jelled teams.
why Performance Evaluation and Incentives are bad.
I was a lot like the learned descendants of theGiving somebody positive reinforcement (such as
spiritual teacher who wrote scholarly treatises aboutstupid company ceremonies where people get
the religious significance of tying up a cat forplaques) implies that they only did it for the lucite
meditation practice. I never questioned Joel'splaque; it implies that they are not independent
views.Today I firmly believe that Performanceenough to work unless they are going to get a
Evaluations is a must and it must be linked to salariescookie; and it's insulting and demeaning.
and incentives.Consider an Athletics Coach not timingI looked up in the dictionary and found out the
his sprinters. He just tells them to run everyday. Itmeaning of the word - Bribe.briben : payment made
would be a matter of time before the sprintersto a person in a position of trust to corrupthis
would get tired and would stop running. So whatjudgment
does he do. He sets the goal. If you are a 100Bribe \Bribe\, v. i.1. To commit robbery or theft.
meters sprinter then first and foremost you are told[Obs.][1913 Webster]2. To give a bribe to a person;
that if you have to be the best in the world youto pervert the judgment orcorrupt the action of a
have to beat 9.78 seconds. i.e. first define the targetperson in a position of trust, bysome gift or
or set the expectations. Now the coach starts topromise.[1913 Webster]Now is giving an incentive a
time the sprints and evaluates his technique, speed,bribe. Definitely Not. No organization gives an
capability and so on. And after each evaluation theincentive for doing an illegal work. Also, if incentives
coach works out on ways to improve theare wrong then I guess even salaries should be
performance further.considered as a bribe. "You work and for that work
This is exactly why Performance Evaluation shouldI'll give you money at the end of the month
be done.Let's take another example. Consider an;-)".Incentives are given only to the best to perform
automobile company which makes cars. If theybetter. And the only only way to guage this
decide to take out a new model and if it is a one badperformance is by performance evaluations.Many a
car,even if they made a million more in the sametimes people do feel that company ceremonies are
technique they would not become the best carstupid because they get plaques. Well one reason for
makers. They will however becomes experts init the way the reward is seen. For many the plaque
making bad cars. So what should they do. First, theyis just an object which does not cost a lot. I am sure
define what a "Good Car" is. Then they make it andif the reward is a million dollars these same people
see how the customer reviews its performance.would want company ceremonies very hour.
Based on this evaluation from the customers the CarIn the Olympics the top honor is just a piece of
Maker improves upon the cars and slowly theymoney which anybody can buy..... But yet for many
become experts.In Management there is a beautifulathletes an Olympic Gold is the very purpose of their
concept called "PDCA" cycle Plan, Do, Check, Act.life.Amarjyoti Krishnan heads bobcares.com, a tech
Performance evaluations work on similar systems andsupport company for webhosts and ISPs. He is the
the target of an P.E. system is continual improvementco-founder of Poornam Info Vision Ltd., a software
of the organization and the individual.Mostand IT services company which specializes in Linux
Performance Evaluation Systems are based on thisbased solutions for Webhosts and ISPs. Poornam
principle of setting the expectations and thenInfo Vision is an ISO 9001:2000 certified company
evaluating the progress.Treating your rocket scientistwith a team of over 100 engineers.Amarjyoti is a
employees as if they were still in kindergarten is notComputer Engineer based in India and has over 7
an isolated phenomenon. Almost every company hasyears of experience in the hosting industry. He has
some kind of incentive program that is insulting andspoken and written extensively on the subject. His
demeaning.articles have been published both online as well as in
Even a Rocket Scientist needs to know hisprint in magazines.
expectations when he goes to work. Infact a great