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The Limitations of Reward in Organisational Development

The ongoing inquiry into the Post Office Scandal[1] has recently brought to light disturbing evidence. It appears that Post Office investigators were incentivised with monetary bonuses for successful prosecutions and the confiscation of funds from sub-postmasters and sub-postmistresses affected by the faulty Horizon software[2]. 

As discussed in Dan Pink's book on motivation, "Drive[3]," the repercussions of offering extrinsic rewards without adequate safeguards can be severe. People might exploit the system, ignoring long-term consequences for the sake of immediate gains.

The effectiveness of rewards, such as bonuses and salary increases, in motivating and disciplining individuals has been a subject of ongoing debate. While some argue that extrinsic incentives can drive desired behaviors and outcomes, there is a growing body of evidence suggesting otherwise. Let's explore the limitations of relying on rewards in these contexts, emphasising the significance of intrinsic motivation, autonomy, and a focus on long-term growth and development.

One notable flaw in relying on rewards is that they often target surface-level behaviors. Employees may conform to standards or rules to earn rewards, but this doesn't necessarily translate to a true understanding of the subject matter or the development of essential skills. For example, in education, learners may memorise information solely for exam purposes without grasping the concepts or being able to apply them in real-life situations.

Additionally, rewards can foster a short-term mindset, where individuals become fixated on immediate gratification or avoiding negative consequences. This can hinder critical thinking, problem-solving, and deeper understanding, leading employees to focus solely on achieving targets or earning bonuses rather than pursuing genuine personal and organisational growth.

Another significant limitation is that rewards often cultivate a culture of compliance rather than autonomy. Constant external motivation can lead individuals to become dependent on incentives, hindering the development of a genuine passion for the subject matter. This can result in employees merely following instructions without actively contributing unique perspectives, ideas, and creativity.

Furthermore, rewards can inadvertently create a fear-based environment, where individuals are afraid to take risks or make mistakes due to the fear of missing out on rewards. This fear can stifle innovation, experimentation, and the development of critical thinking skills. In organisational development, a reward-oriented culture can discourage employees from proposing new ideas or challenging existing practices, inhibiting creativity and growth.

It's crucial to recognise that intrinsic motivation, arising from genuine interest, personal satisfaction, and autonomy, is a more powerful driver of long-term learning and development. Fostering intrinsic motivation can be achieved through various strategies, such as designing personal development courses that tap into learners' passions and providing employees with autonomy and flexibility in their development journey.

In organisational development, cultivating a sense of purpose and meaning in employees' work significantly impacts motivation, commitment, and performance. Aligning individual goals with the organisation's mission, facilitating opportunities for skill development, and creating a supportive work environment that values employee well-being and satisfaction are essential.

Rewards have their limitations in organisational development. While they may produce short-term compliance and behavior change, they often fail to foster true understanding, intrinsic motivation, and long-term growth.

The inquiry into the Post Office Scandal reveals how the organisation's bonus scheme inadvertently encouraged bad behavior, especially among the investigation team. Instead of safeguarding the organisation's reputation, it has led to scandal and a public inquiry and a very public shaming of all involved. Once known as "Britain's most trusted brand," the company has lost its reputation and integrity. The CEO has even deemed it necessary to return the CBE she was awarded for achievements made under the extrinsic reward system.

Imagine how different it might have been if the Post Office leaders had prioritised intrinsic motivation, autonomy, and a focus on personal development. Creating an environment that nurtures a genuine passion for learning and a drive for continuous improvement could have yielded a vastly different outcome.


[1] Post Office Scandal website
[2] Sky News
[3] Daniel H. Pink: Canongate Books Ltd: 2011  YouTube video


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