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Business Management: Employee Incentives or Punishment?

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The Fallacy That Threats Improve Employee Productivity
A chain of waxing salons develops requirements for their employees 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 a lot of stress to meet requirements that are unreasonable. In addition the chain constantly threatens to fire employees who fail to meet the 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 make employees improve productivity. However, this way of thinking is counterproductive because people tend not to do their best under threat.

This business management strategy of threatening happens at all levels. Managers, technical people and professionals of all kinds who work in corporations are often trapped in a corporate culture that has a 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 who are still employed. Stress and fear does not improve productivity.

Parental Punishment and Threats Fail to Produce Children’s Best Behavior
The idea that punishment and threat of punishment fails to improve productivity starts in each person’s childhood. Children whose parents threaten them with punishment or attempt to induce positive behavior through punishment often have three choices—they acquiesce because they’re smaller and less powerful, but they only do the minimum required by their parents. Or 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. Finally, they might pretend to acquiesce but frequently “forget” to do their chores or secretly sneak out at night when their parents are sleeping or they learn to manipulate their parents in other ways.

The same is often true between employers and employees. Business management whose strategy is to attempt to get their employees 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.

Incentive and Reward Improve Productivity
Threat of punishment or loss of jobs creates lack of a sense of safety and employees are actually unable to do the best that they could do. 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 education for employees on how to sell more or how 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.

Creating a Feeling of Community is Better for Business Management
There is more information on improving productivity and business management, as well as other ways to make businesses more successful.

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