Joel Spolskly, a software businessman, writes that reviews and incentive pay are unhelpful because:
- They cheapen the work of those who are doing a good job
(makes them feel as if they are doing it just to get good reviews or extra pay)
- They damage the morale of those who are doing averagely well - the vast majority.

Alfie Kohn, in a now-classic Harvard Business Review article, wrote:

, at least two dozen studies over the last three decades have conclusively shown that people who expect to receive a reward for completing a task or for doing that task successfully simply do not perform as well as those who expect no reward at all. [HBR Sept/Oct 93]

He concludes that "incentives (or bribes) simply can't work in the workplace". DeMarco and Lister go further, stating unequivocally that any kind of workplace competition, any scheme of rewards and punishments, and even the old fashion trick of "catching people doing something right and rewarding them," all do more harm than good. Giving somebody positive reinforcement (such as stupid company ceremonies where people get plaques) implies that they only did it for the lucite plaque; it implies that they are not independent enough to work unless they are going to get a cookie; and it's insulting and demeaning

http://www.joelonsoftware.com/articles/fog0000000070.html

If performance reviews don't work, and incentive pay causes more harm than good,
then how can employers motivate their employees to do the best jobs possible?

There r simply a way of keeping up compettion which may lead 2 harmful practices because pple do all sorts of things 2 keep up. It's all abt d survival of d fittest which in my understanding of things is lacking in love. Every one should b given an opportunity 2 develop at a pace they r comfortable wit and a pace at which they are strong enough 2 keep up with

Internal and external Training and retraining of employee may just be perfect 'cos it leads invariably to priceless/key development of individual employee and in turn culminate to collective workplace development rather than a lot of incentive pay rise/performance review. this infact would reduce the effect of a counterproductive over-rewarding of an employee at the detriment/demanding/demeaning of others, leading ultimately to disatisfaction,thus creating a raving looming problem for an employer to contend.

pls seun,i dont understand this very well.

Performance reviews are usually subjective. They are open to abuse by the supervisors and managers. Supervisors/managers usually have their sights on a likely successor and what better time do they have to promote their chosen one than during performance review periods?

In Nigeria, they seem to serve no purpose in many companies, especially when they are used for salary reviews. Everybody gets the same percentage increment, so what's the need of the performance review in the first place?

As per most people's view points, i feel it is one of the better ways by far for measuring and rewarding performance. Although not completely without bias and personal views as well as relationships, it does offer both parties a way of bringing forth their arguments be it for a raise - dependent on job profile and objectives and against - based on job profile, objectives, punctuality, company fit and attitude. It can also take into account colleagues and external clients/affiliates' feedback on you as well (if done properly). But in my experience the appraising manager already has an idea how many and who will be fitting within that top 20% level, so unless you have been a constant high-flyer you better prepare your argument for extensively.

Yeah Seun
I have been in management for quite some time, and i some how tend to agree, you see the problem is that been human as we are, 60% of the times, managers, especially in this clime tend to be subjective when its time for appraisals, in most cases they are blinded or seems not to notice that a good nos of those with better appraisals, i mean those you may refer to as the 20%(Pareto's etc) are those who do 'EYE SERVICE', any way i may be wrong but that's my observation. However, over the years i have studied and used various Performance evaluation tool and i THINK the BALANCED SCORE CARD OR BSC developed by Kaplan and co is the best so far, because it has inbuilt feedback mechanism, and it is self appraisal. At the beginning of the year, you agree on targets, set objectives etc in 4 different perspective which of course are driven from the vision of the company. it is then signed off and at the end of the year or period you evaluate yourself based on achieved variables and your boss can hardly alter it if the facts behind the figs are properly laid out and presented.

Engr. Agah

wow. what a coincidence. i am currently preparing a paper on performance based compensation and to while away the time i came to see whats happening on nairaland. i do not agree that compensation based on performance will not give any better job results. yes there is the nigerian factor of he is from my village bla bla bla but if dont pay for performance then what are you paying for?