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Managing for Happiness by Jurgen Appelo

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Figure depicting various kudo cards with encouragement and gratitude messages.

© 2015 Jürgen Dittmar

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There are many wrong ways to reward employees. A simple but effective approach is to install a kudo box, which enables people to give each other a small reward. The kudo box fulfills the six rules for rewards and works much better than bonuses and other forms of financial motivation.

In 2001, Enron, an American energy and services company, collapsed into bankruptcy because its managers liked their bonuses more than they liked the truth. They incentivized themselves to maximize their own paychecks, not the success of the organization. Similar creative financial practices occurred at Parmalat, WorldCom, Bernard L. Madoff, AIG, Barings, and many other companies. Corporate history is littered with the remains of organizations that allowed individual greed and egos to outgrow the solvency of the company. And bonus systems are still implemented all around the world “to incentivize performance,” despite the fact that experts have known for decades that there's no proven correlation between bonuses and performance.1

Indeed, excessive greed might be the biggest problem in free markets. Bankers in the United States and Europe have been so ...

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