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The Sad Spirit of Incentives

Regenerations/2 - No company can domesticate the person's moral strength

by Luigino Bruni

published in Avvenire on 02/08/2015

Logo rigenerazioni rid"The man who wisheth to reap the fruits of virtue is a trader of virtue."

Mahabharatasacred book of Hinduism

Organisations cannot have the most important virtues they need. The wise ones accept the 'gap' between the desired virtues and those that can be had by their workers, and so they learn to live together with the inevitable need of the human qualities essential for their operation and growth, without trying to replace them with some simpler things.

The first wisdom of each institution is to recognize that they do not control the souls of their members - all virtue is above all a spiritual matter. When this awareness is missing or denied, companies and organizations do not stop at the threshold of the mystery of the worker-person and do their best to fill the 'gap', ending up losing the best part of their workers. The stunning collapse of this form of institutional wisdom is one of the most serious instances of poverty today, because it is presented as a form of wealth, and so it is not fought but powered.

The difference between the virtues required of their members and those available has always accompanied social life, especially in the western world. All good institutions have always been beggars of virtues. Monasteries, governments, even the armies had an essential need of the highest virtues of the people, but they knew that these could not be obtained by command or by force: they could only welcome them as free gifts of the soul of men and women. What's new today is the total eclipse of this ancient, wise awareness, especially in the world of big firms that are more and more convinced that they had finally invented the tools and techniques to get all the virtues they need from their workers - all their mind, all their strengths, all their heart - without needing either moral force, or, even less, gifts to be offered. And so they end up with pseudo-virtues.

This mass destruction of virtues has a lot to do with the ideology of incentives. The culture that is practiced in big companies, particularly on the higher levels of direction, is becoming a perpetual worship of the god of incentives, an actual faith whose main tenet is the belief that you can get excellence by people if they are remunerated properly. Meritocracy is born from an alliance with the ideology of incentives, because merit is recognized by building a more and more sophisticated and custom-designed system of incentives to get the most out of every person in order to obtain, if possible, everything. And so they believe that if they 'enchant' people with incentives they can freely do their best (remember that the words incentive, enchantment and enchanter all have the same root). In fact, incentives are not only an unsuitable tool for creating and strengthening the virtues, but they usually destroy them by drastically reducing the freedom of the people. Incentives, especially their latest generation built around the 'management by objectives', look like a contract (and indeed they are), and therefore as one of the highest expressions of the 'freedom of modern people'. But it is enough to look at it a bit more carefully to immediately notice that the freedom of the culture of incentives has nothing to do with the freedom necessary for the development and strengthening of the virtues of real people. That of the incentives is an ancillary freedom which is small and serving the objectives set and imposed by the company's management. It is a lesser kind of freedom, which is very similar to that of a blackbird in an aviary, that of lions in the zoo, although, unlike animals, we think that we are entering freely in our cages and natural reserves. Actually we enter fascinated by the enchanter flute (incentivus, i.e. flute), and do not get out anymore.
Let's just think of, for example, loyalty. Only a few words like loyalty are evoked by the corporate culture. It is a key term in job interviews, we find it in the certificates of good conduct, it is an essential part of the repertoire of the ideal employee that every company wants to have. Loyalty is a virtue that makes us able to be faithful to a person, an institution or to a value in situations where our behaviour is costly and cannot be observed. Loyalty cannot be established by contract. It's all a matter of the soul. But we all know that in every contract there is an implicit assumption of loyalty, one that we cannot buy, however. Contracts do not establish themselves because they need pacts, and so loyalty and many other pre-contractual virtues. If contracts replace virtues, they end up undermining the ground beneath their own feet.

The basic grammar of loyalty is found in the beautiful episode of Joseph and the wife of the Egyptian Potiphar. While Joseph was in the house of Potiphar, on a day when “none of the men of the house was there in the house”, the woman “cast her eyes” on him and said: “Lie with me” (Genesis 39). Joseph answered: “...my master ... has not kept back anything from me except you... How then can I do this great wickedness and sin against [him]?” He made a loyal choice that cost him jail, when the woman he refused accused him of having molested her.
For loyalty to emerge, three elements are necessary: a relationship of riskful trust, a concrete cost that the person has to bear doing or not doing something that would avoid that cost, and - the third crucial element – that the loyal action itself should not be observable. Therefore, the value of loyalty is measured on the basis of what I could have done but I did not do because I wanted to be loyal.

Loyalty is the spirit of pacts and promises that live off of visible choices and acts supported by invisible acts and choices. There are words not spoken, things not done, secrets kept inside for the love of someone for a lifetime - they generate, regenerate and do not let our pacts die, including those that are the foundation for the life of enterprises and institutions. Words not said and things not done for which no one will ever say 'thank you', but which give moral weight and dignity to our relationships and our entire existence.

It is clear then that the virtue of loyalty cannot be enforced, nor is it possible to create it through incentives. Indeed, the logic of incentives discourages loyalty precisely because it encourages and reinforces visible, controllable and contractual types of behaviour.

This opens up a new scenario. Our ability to be loyal is not a constant stock, but varies over time based on the quality of our inner life and on the relational signals that come from the communities in which we live. My choice to be honest here and now will depend on my intrinsic moral rewards but also on the perception that the given company or community is 'worth' the costs of loyalty, which can sometimes be very high. Companies cannot create loyalty - because it's all entirely and only the gift of the person - but they can try to put already loyal people in a position to exercise this virtue there, too.

But it is precisely here that the mechanism of the self-destruction of loyalty and other virtues produced by the logic of incentives is revealed. Big companies and banks have a growing need to control the actions of their members, to be able to predict them and to direct them towards their goals. What they fear more than anything else are the action areas outside the management's control, the promiscuous border areas; they do not like the houses where "none of the men of the house" is there to control, to manage and to evaluate things. And the reason for this fear and this distrust is the pessimistic anthropology that, beyond words, is the basis of the system of big capitalist institutions. Directors, and even more so the proprietors (and sometimes even unions), think - more or less consciously - that the employee is generally an opportunist and should therefore be checked. In the factories of yesterday this control was very crude and obvious; with the introduction of incentives the same practice got disguised as freedom, but in essence the culture of total control was intensified, because now it gets through even to the soul. This is why the big capitalist organizations reduce the unobservable spaces of action and freedom systematically. And so they also reduce the preconditions for loyalty and many other virtues to be practiced - they all need real freedom and riskful confidence to stay alive. This creates a radical and progressive creation of contractual 'loyalty', which - being observable and controllable - lacks the most valuable part of the virtue of true loyalty. We find ourselves in institutions populated by virtue-bonsais, all controlled and inscribed under the roofs of the businesses themselves. But bonsais do not bear fruit, or if yes, they are tiny and inedible.

All this produces a phenomenon of great importance. These small and manageable 'virtues' work well enough for the ordinary situations of business life, but make organizations highly vulnerable in times of great crises, when there would be a great need for the loyalty and true soul of the workers that, however, have been replaced by incentives in the meantime. By eliminating the uncontrollable space of freedom and trust, the ideology of incentives reduces the small instances of vulnerability but increases the big instances of vulnerability of large companies tremendously, as they are devoid of the ethical antibodies essential for survival in serious illnesses.

Humans are much more complicated, complex, rich and mysterious than the institutions and businesses think they are. Sometimes we are worse, many times better, but always different. We find feelings and emotions in ourselves that do not allow us to be as efficient as we should. We disperse infinite resources in applications for recognition and respect that - we know - will never be satisfied by the answers we get.

We go through physical and spiritual trials, emotional and relational shocks. But we are also able to do things that are much more worthy and higher than those required by the contracts and rules. And we stay alive and creative as long as the places of living do not shut off the light of our heart, reducing us to their own image and likeness, erasing that surplus of the soul where our salvation and that of our companies lives.

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