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Corporate culture and incentives

How, why and by how much should people be incentivised? Are incentives and motivation identical partners? Why do gross errors occur, and how do you guard against them? And how exactly do you use error as a springboard for excellence?

The supposition is that high brainpower is a protection against low stupidity. In harsh fact, the brighter they are, the further they fall. Very clever people are all too often very arrogant – and arrogance is one of the last attributes that people of power can afford to let rip. Yet many, if not most, do precisely that.

The reality is that the corporate culture of incentives and the quest for personal reward diverts managers from their allegedly prime job – managing the organisation to achieve optimum corporate results.

You can’t exactly blame the beneficiaries. As I’ve often stressed, give a man a blank cheque and carte blanche to fill in the figures to his pleasure, and he’s not going to be overcome by modesty. Greed is the word. The evidence indicates overwhelmingly that these sums, however gigantic, have no impact on the quality of management. They have a most potent effect on motivation, true. But that can work against the supposed effect of incentives to stimulate collective performance. Motivation to enhance personal gains, on the other hand, has only that enhancement in its sights.

The most distressing aspect of incentives which have no true incentive element is not that they demoralise those who don’t share the gravy (which is a major adverse influence), but that the engine seems to surge on regardless of all criticism.

Negative incentives are at least as important as the positive variety. Yet there is nothing secret about what causes poor motivation, or about whether it is occurring. The grumbling and unresponsiveness are deafening, if you care to listen. And there are plenty of highly trained consultants who can tell you what’s going wrong and why – but all their help is no use to people who won’t face hard realities.

Gross errors occur because of denial. It follows that the best protection against error is denying the deniers. Often the latter are simply peddling lies. The Wall Street masterminds, when forced to confess their subprime losses, mostly began with much lower numbers than those that are now apparent (and very possibly still growing). The denials served no purpose save to put off the evil day.

That day arrives all the same – and the mark of the Supermanager is that error is not only admitted, but is tackled with the same energy as success.

Persisting in serious error perpetuates sin and shuns opportunity. Positives can be born even from negatives -and such birth is the most powerful incentive and motivational force of all.

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