Obscene bonuses and salaries continued to dominate the headlines in 2013. In South Africa, the stark gap between mining workers and company bosses remained in the spotlight after labour disputes got ugly and lives were lost in 2012.
Although there’s much anger and astonishment everywhere about how the rich continue to get ever richer on the backs of the working poor, the corporate snouts haven’t come out of the feeding trough. This is a situation that disgusts prominent South African mining figure Bernard Swanepoel, who blogs about this issue here on Biznews.com.
His blog was well read, not least of all because it is so unusual to hear a prominent business mover-and-shaker say things like “we grab because we can” and refer to remuneration structures as “corporate self-enrichment”.
Bernard Swanepoel: I don’t like incentives
None of that mattered, I was fanatical!Looking back, I can honestly say that I have never done anything specifically because of a monetary reward or incentive. During my very first month as a miner I received a R10 voucher as a safety reward. Imagine: not killing or hurting anybody in my team for a month entitled me to go and buy a kg of fillet at the local butcher in Springs! It felt all wrong!
Would I have not done my job, or would I have done it less well had I not been incentivised? This has always been my problem with incentives – the implied insult that I would not/will not give of my absolute best, unless paid for it!
So what are monetary incentives supposed to achieve? Well researched and well published by the academic fraternity is the finding that incentives only work for menial, basic work that is boring and repetitive. Sounds like labourers and piece workers should be the only ones getting them.
Money incentives and happiness
What’s more, research has found that incentives don’t enhance happiness, creativity, commitment or any other objective measurement of individual or team performance. Instead the opposite is true. They kill creativity and turn fun activities into chores. I would bet that in any honest organisation, employees would admit that monetary incentives are actually a major cause of dissatisfaction and unhappiness.
So why then don’t we stop such foolishness? Well, there may be merit to the argument that at the bottom of the organisation incentives may work and certainly make a critical difference to employees’ livelihood.
At the top it is quite another story! Incentives are the corporate self – enrichment equivalent of tenderpreneurship. Maybe we should simply call this “execupreneurship”.
We grab because we can. Public disclosure means that we all know who makes what (and who has made more than us) and this figure has become some perverse metric of our worth as individuals. Everybody knows somebody in their own or a competitor’s company who makes more than them: the result? No one is ever happy…we all want more than the next guy (or girl).
It gets bizarrely out of hand: how does a bank executive justify earning a couple of million Rand a month, (the equivalent of a few hundred thousands every working day), when other people in the same organisation can’t earn that in a year. Are they really that much cleverer or more important?
Bernard Swanepoel compares executive incentives to gambling
Executive incentives are like gambling with the House’s money. No downside and unlimited upside. But why would the rational providers of capital allow this? Well, they are in on it as well.
It is not their money either. The aggregators of investor’s money are incentivised by their own set of rules, without taking any real personal financial risk or providing any capital. It is such a no-brainer way to become a millionaire at a young age that smart people who should be starting businesses are all rather making fortunes allocating capital.
At least let’s recognize that we are all in it together. As one fund manager in New York once famously told me: ‘I won’t sleep at night if I don’t know that your incentives are aligned with mine.’ I am not sure that is what I want to sign up for.
So in conclusion, if you do “do incentives”, perhaps you should treat them like vitamin C….take “them” but don’t forget the real medicine: leading and motivating your people in more sincere and sustainable ways.
* Bernard Swanepoel is a founding director of To The Point Growth Specialists, a mining consultancy based in Johannesburg. He built Harmony Gold from a small single mine into one of the world’s biggest gold producers. Since leaving Harmony in 2007, he has applied the same entrepreneurial skills to Village Main Reef, transforming the cash shell into a significant gold and platinum business.
