Kathmandu University School of Management

Balkumari, Lalitpur

Assignment II

Case II
Bonuses can Backfire
Fundamentals of Organizational Behavior

Submitted By:
Anamika Shakya
Roll Number: 18785
Reg No:023670-18
Section: C
BBA Year II

Submitted To:
Mr. Shree Krishna Pokhrel
Faculty of Organizational Behavior
KUSOM
Date:18th July, 2020
QUESTIONS

1.Do you think that, as a manager, you would use bonuses regularly? Why or

why not?

Answer:

As a manager, I think that bonuses should not be given regularly and

frequently because if the bonuses are provided regularly then it has higher

possibility of losing its importance and value. Though bonuses are important for

the employees as it propels a huge motivation in the individuals but giving the

bonuses regularly to the employees may backfire for the company as mentioned in

the case itself.

The case has described the negative effects of rewards for an individual’s

performance in an organization. Although the rewards like bonuses serve as a

motivation for the employees to improve their performance, it is often found that

the rewards have backfired and has resulted into declines in the performance of the

employee.

In my opinion, as a manager I think that the rewards must not be given

regularly because of the reasons described below:

1)Decreased willingness in employees to work effectively in absence of bonus:

When bonuses and other rewards are provided on the regular basis the

employees may slowly refuse to work without such bonuses in the future as

described by the example of children in the case where children rewarded for

drawing with felt-tip pens no longer wished to use the pens at all when rewards

were removed. As a result, the objective and the main purpose of the bonus will

not be met.

2) Unrealistic Expectations

Bonuses and rewards can encourage productivity but it can also backfire

and can have great disadvantages to a company and its workers. One of the

drawbacks of offering the bonuses is that they can create unrealistic expectations

among employees. For example, if a business gives bonuses in one year due to

higher profits but has poor profits the next year, employees might expect bonuses

again even if the company doesn't have the capacity to provide the bonuses.

Employees who receive bonuses one year and nothing the next year may feel

dissatisfied and may get demotivated to perform well. Once the bonuses are given,

employees tend to expect them regularly. So, when the company is not able to

provide the reward next year the employees end up being unhappy and dissatisfied.
3)May encourage cheating and unethical behaviors:

Rewards can also lead to misbehavior, cheating and unethical by employees.

As mentioned in the case, Psychologist Edward Deci has said that “Once you start

making people’s rewards dependent on outcomes rather than behaviors, the

evidence is people will take the shortest route to those outcomes.” Because of this

reason the promise bonus may backfire and it may turn out to become an incentive

to cheat, and cross ethical boundaries rather than improve performance.

In the case, the example of the workers in the factory has been described. It

has mentioned that when a factory is paid purely based on the number of units they

produce, in that case only the quantity is rewarded, so the workers may neglect

quality. Sigillary, the executives rewarded strictly on the basis of quarterly stock

price will tend to ignore the long-term profitability and survival of the firm and

they might engage in illegal or unethical behavior to increase their compensation.

Rewards and bonuses instead of motivating employees to perform well in

the benefit of the company can often backfire and may result into cheating and

unethical behaviors in the company.

Therefore, the mangers should focus on providing a positive environment to

motivate the employees rather than piling up the bonuses. The regular bonuses
also may result in moral, ethical and personal conflicts. Managers must be careful

to analyze the effects of bonus on the employee behavior. Thus, instead of

providing the bonuses on the regular basis, the managers should try to focus on

bringing the intrinsic motivation among the employees and should carefully

analyze about the possible pros and cons of providing bonus to the employees.
Question 2

2.Can you think of a time in your own life when being evaluated and
rewarded on a specific goal lead you to engage in negative or unproductive
behavior?

Answer:

Yes, I can recall the time in my life when being evaluated and rewarded on a

specific goal led me to engage in unproductive behavior.

To be honest, in our life time most of us have experienced the negative and

unproductive effect on our behavior due to rewards. A very common example that

we can see that in our country that most of the parents reward their children for

good performance in their studies which often turns out to be negative and

unproductive for the children. For the achievements of children, the parents

provide them with various rewards which gradually have a negative effect on their

performance for example the children in hope of getting reward instead of doing

hard work and studying well may end up cheating during exams to score well. In

that case the children do not gain any knowledge while he/she cheats in the exam

in the hope to get rewards from their parents. So, in order to motivate them to keep

up the good performance the parents should give them emotional support and
provide a supportive atmosphere at home instead of giving them instead them

materialistic rewards.

Recalling my own experience, my parents also rewarded with many

materialistic things after scoring good marks in the S.L.C. I was very happy after

receiving the gifts and rewards but it did affect my performance later on. I was

rewarded with a scooter after 10th grade due to my good marks so after getting a

scooter as a reward during my further studies in high school and college , I was

enjoying riding the scooter by visiting different places often even during the time

when I should have studied which hampered my performance in the 12 th and

bachelors. Thus, the reward that I got for good grades after my 10 th grade actually

resulted into the unproductive behavior and degraded performance in my further

studies.

Thus, from this experience in my life, my perspective about the rewards

have been changed and I got to realize that every time rewards or extrinsic

motivation may not have positive effect in the behavior of a person. For motivating

a person for better performance, the rewards are not the only way but what is most

important is that there must also be intrinsic motivation along with the extrinsic

motivation in order to actually motivate a person to perform well.