Synthesis: "Carrot and Stick" Management

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This was part of my BA1002: Management Principles back August 2016 when I was still taking up MBA. After submission, my professor actually told me to site books and actual papers, which to me, given the topic I’ve chosen is pretty damn hard!

Background

We live in a world where putting up a company is now a matter of clicks and where being CEO is as common as it can be. These companies, usually startups, are springing left and right across the globe, trying to “disrupt” every market possible. They’re in a race, and talents, more often than not, are both the jockey and the horse. And as it seems, modern management that is common in startups, in a sense has some of its roots from slave owners.

Carrot and Stick

First, what is a startup? The best definition I have found is that “a startup is designed to grow fast” (Graham, 2012); ‘grow’ in a sense that the company can put up a product that a lot of people want and scale and accommodate all of them quickly. With this, startups are hard at work to attract potential employees with their compensations and bonuses, and stock options to keep up with the growth. Incentivising employees in exchange aren’t new. As it seems, US plantation slave owners during mid-1800 heavily used accounting data and with such with their ground managers, organize contest for picking up the most cotton in exchange for a small cash prize with the condition however that winner’s output be the same from there on (Rosenthal, 2013). Conditions in the aforementioned contest are still present nowadays. However, there is no guarantee that employees will stay as productive with a reward. It has been shown that the effects of rewards are rather short term and are for simple tasks and do not necessarily effectively apply to long term and for complex tasks as rewards only assure one thing, temporary compliance (Kohn, 1993). “Incentives … do not alter the attitudes that underlie our behaviors,” Kohn says. “They do not create an enduring commitment to any value or action. Rather, incentives merely — and temporarily — change what we do.” (Kohn, 1993).

From experience, however, these rewards come with holes that only management exploit and only rewards it once to make employees believe. The reward was a month’s salary if the deadline was met, however, they add increasing scope in reason that the milestone will not be the same without it. Middle managers do not effectively protect their teams from upper management. If not met, employees are met with shared collective disappointment that of an unmet milestone and will be followed with the promise again that next time that we’ll have a better chance in attaining it, but the cycle will repeat itself. An additional promise given too is the culture, and if you are not fit in it, it won’t make your job easier. Not all companies or startups are like these however, there are incentives and rewards that do have its benefits — salary, status, job security, work conditions, and how your manager treats you are all part of what is called the “hygiene factor” (Baer, 2014) which far better encourages and rewards the employees to be motivated and be more productive.

Conclusion

Companies and startups are in a race to be the first and scale fast, and the need to incentivize and offer the best benefits to potential employees is reasonable. However, these rewards do not come as is without a catch, and more often than not, employees are the modern slaves. Yes, these modern management methods may have its origins from plantation slave owners, but the problem is more on how the middle managers prevented upper management from exploiting it. Add to that the prioritization of short-term rewards instead of the “hygiene factors”. It is a carrot-and-stick cliché — working within startups may feel like modern day slavery, this is to some extent to be expected as they meet to scale, but it is a phase that should be temporary and companies and startups should accompany that phase with better working relationships with their employees.

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