Incentives do not rule

Dank Pink summarizes the research that--for the vast majority of jobs--monetary incentives do not actually improve employee performance. In many cases, incentive pay actually harms employee productivity.

It's useful to keep in mind the fact that, by embracing the monetary incentive model, business interests demonstrate their utter incompetence at their own game, let alone their forays into influencing public policy. Businesses seldom have the slightest clue what is best for their own company; why should we believe that they know how to create jobs or fight poverty? This is one of the best examples of business' tendency towards ignorance of--if not outright hostility towards--evidence-based practice. And, if incentives don't even work for most types of paid employment, why do we design public policy around the idea that monetary incentives rule human behavior? 18 minutes well spent, after the jump:

The case against paying employees with tips

Image: Food service worker (source)

Would the market rapidly switch to a business model that provides higher quality goods and services and greater revenues? Go to the nearest sit-down restaurant to find out.

A couple of years after opening the Linkery restaurant in San Diego, the team and I adopted a policy of adding to each dining-in check a service charge of 18 percent—a little less than our tip average had been. We also refused to accept any payment beyond that service charge...When we switched from tipping to a service charge, our food improved, probably because our cooks were being paid more and didn't feel taken for granted. In turn, business improved, and within a couple of months, our server team was making more money than it had under the tipped system. The quality of our service also improved. In my observation, however, that wasn't mainly because the servers were making more money (although that helped, too). Instead, our service improved principally because eliminating tips makes it easier to provide good service...