Incentive Warning – It’s not that easy!

You may remember a post I did a while back about the book "Made to Stick."  Authored by Dan and Chip Heath, the book was a great read and included a lot of information that managers should use EVERY day to communicate the company culture and get that culture to "stick" within the organization.

The authors recently had an article up on FastCompany called "Why Incentives Are Irresistible, Effective, and Likely to Backfire"

Normally, I read a headline like that and I go a bit bonkers because in one sentence the entire field of incentives is painted with a negative brush.  However, what I think the article really communicates is that incentives are very effective – so effective, so powerful, that the "average person" should not try them at home.

My favorite part of the article:

"Yet incentives are still the first resort of most managers, perhaps
because they all think they're smart enough to create the perfect
carrot."

And I'm not saying managers aren't smart.  It's simply that without a good education in the design of incentives – with the proper experience, education and knowledge of how people REALLY react to incentives you can create some pretty bad results.  Examples from the article include incentives to get programmers to code more by paying them by the line of code – natural result – programs with lines of code that would put War and Peace to shame.  The article mentions incentives for quarterbacks to reduce interceptions – that's an easy one – stop throwing passes (not what they had in mind.)

Lose Your Illusion

The authors bring up a great point about incentives – and why it takes some skill to put them together.  They hit on something called the "focusing illusion."  This occurs when you focus on one variable within a larger context as THE variable – and the ONLY variable – that will impact your results.  When your incentives focus in one thing you are sure to get results in that one area – to the detriment of all other variables that have an affect on outcomes.

This is not the first time I've brought this up – here, here, here and here.  It is a big problem for those that design programs. 

But, you can avoid some of these issues if you do two things…

#1 – Design your program within the context of a larger mission and initiative.

If you have umbrella programs in place you will have the ability manage the impact any one incentive will have – balancing the affect of the program.

#2  Get an Outside Opinion.

One thing to keep in mind – an outside opinion will be less likely fall under the spell of the focusing illusion due to the fact that the outsider doesn't have the biases that the insider has.  The real value our clients see in our engagements is our ability to see their business issues and their motivation issues through a much larger lens – bringing more ideas – and better ideas to the table.

Take a step back, ask the questions and recognize that you may be focusing too narrowly on the problem of motivation within your company.