Is pay for performance bunk? What does it really incent?

Remember pay for performance?  Incenting physicians based upon quality measures or patient outcomes or productivity?  A real good idea on the surface; also an idea proving difficult to implement.  Anyway, new research says pay for performance compensation packages in the general business world may not achieve its intended benefits.

Dr. Bernd Irlenbusch from the London School of Economics:

We find that financial incentives may indeed reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace social norms such as fairness. As a consequence, the provision of incentives can result in a negative impact on overall performance.

Something to pay attention to in this era of reformation.

(pointer from Dan Pink)

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