But few have asked whether performance-related bonuses really do improve performance. The answer seems so obvious that even to ask the question can appear ridiculous. Indeed, in spite of all the complaints about them, financial encouragements continue to be introduced in more and more areas, from healthcare and public services to teaching and universities.

　　So it may come as a shock to many to learn that paying for results can actually make people perform badly in many circumstances, and that the more you pay, the worse they perform.

　　No one is arguing that bonuses can help companies and institutions attract and keep the best staff. Nor does anyone argue against the idea that you can encourage people to do specific tasks by linking payments to those tasks. Rather, the point is about how to get the best out of people. Do employees really perform better if you promise to pay them more for getting results?

　　There are some obvious reasons why such payments can fail. It has been argued, for instance, that cash bonuses contributed to the financial crash, because traders had little enthusiasm to make sure that their companies enjoyed long-term survival.

　　Most bonus projects are poorly designed, says Professor Malcolm Higgs. He thinks the reason is that organisations try to keep bonus arrangements simple. Nevertheless, he thinks bonus projects can work as long as they link the interests of individual employees with the long-term goals of a business.

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