Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 7, Issue 44;   October 31, 2007: Illusory Incentives

Illusory Incentives

by

Although the theory of incentives at work is changing rapidly, its goal generally remains helping employers obtain more output at lower cost. Here are some neglected effects that tend to limit the chances of achieving that goal.
The George Foster Peabody Award

The George Foster Peabody Award. The Peabody Awards are given annually for international excellence in programming. Through most of their history, recipients have been in radio or television broadcasting, but that is now changing to include Web-based media. The awards are administered by the Henry W. Grady College of Journalism and Mass Communication at the University of Georgia, and unlike many media awards, there is no set number each year. Nor are they given in pre-determined categories such as Best Documentary or Best Actress. That is, to their credit, they do not suffer from the Manager-of-the-Year problem. According to the Peabody Web site: "Each year, from more than one thousand entries, the Peabody Board selects outstanding works exhibiting excellence, distinguished achievement, and meritorious service by radio and television networks, stations, cable television organizations, producing organizations, and individuals. Though there is no set number of awards, no more than 36 have ever been presented in a single year."

Incentive programs usually work less effectively than we hoped, and sometimes less effectively than we believe. Rarely do we measure incentive effectiveness, and if we do, the measurement is problematic at best. Still, some practices related to incentives are probably counterproductive, and it's easy to find ways to improve. Here are some insights that might help improve incentive programs.

Motivational power isn't proportional to market value
We tend to ascribe a "motivational power" to incentives that's roughly proportional to the monetary value of the incentive. Generally, a trip to Hawaii is believed to have greater motivational power than an iPod.
But motivational power isn't necessarily proportional to market value. For instance, an employee with a chronically ill child might not be able to take a trip to Hawaii — ever. Moreover, some incentives have emotional power but almost no economic value — like the Peabody Awards.
Parallel incentive programs sometimes interact unfavorably
Many incentive programs have parallel threads that interact outside our awareness. Interactions occur when people are eligible for more than one incentive. For instance, "if you win this, you can't win that." Some organizations have policies prohibiting sequential wins.
These effects can demoralize. Winners of incentives from which others have been disqualified can feel that their awards have been cheapened. The resulting benefits the organization was hoping for might not materialize.
Spacing recognition awards makes them more effective
The effects of recognition awards don't accumulate, like say, money, because the effects of two awards are reduced when they occur close together.
Recognition has powerful, positive impact. But for recognition events to be distinctive, leave some space between them.
Let the work define award periods
In many organizations, all awards have the same "period of performance," synchronized to the calendar or fiscal year. This practice increases the chances of interactions, and might not make sense for people assigned to longer-term projects that overlap years.
Motivational power isn't
necessarily proportional
to market value
Try staggering the periods of performance to limit interactions, and to allow for equal recognition of contributors to long-duration projects.
Incentives can actually have negative value
Incentives can actually demotivate. For instance, designating only one "Engineer of the Year" or "Manager of the Year" can be demoralizing when, year after year, we must pass over many important contributors, who might see little prospect of justice ever being done. When some efforts are considered "primary" and others "secondary," the chances of winning awards for secondary activities are usually small, or they seem small to most employees.
Summing the total effects of all demoralization, the "X Person of the Year" award might actually have a net negative effect on overall productivity.

However powerful incentives are, they don't change firmly held beliefs. Only the believers of the beliefs can do that. If you doubt this, try changing others' beliefs about incentives. Go to top Top  Next issue: Devious Political Tactics: A Field Manual  Next Issue

52 Tips for Leaders of Project-Oriented OrganizationsAre your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!

Your comments are welcome

Would you like to see your comments posted here? rbrenxRySpmacsIXbkNJOner@ChacDwLLpZweymZZTAWroCanyon.comSend me your comments by email, or by Web form.

About Point Lookout

Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Personal, Team, and Organizational Effectiveness:

A cup of coffeeHelp for Asking for Help
When we ask for help, from peers or from those with organizational power, we have some choices. How we go about it can determine whether we get the help we need, in time for the help to help.
A bobsled teamTeam Thrills
Occasionally we have the experience of belonging to a great team. Thrilling as it is, the experience is rare. How can we make it happen more often?
Thumbs downRecalcitrant Collaborators
Much of the work we do happens outside the context of a team. We collaborate with people in other departments, other divisions, and other companies. When these collaborators are reluctant, resistive, or recalcitrant, what can we do?
The Johari WindowAssumptions and the Johari Window: II
The roots of both creative and destructive conflict can often be traced to the differing assumptions of the parties to the conflict. Here's Part II of an essay on surfacing these differences using a tool called the Johari window.
The piping plover, a threatened species of shore birdUsing the Parking Lot
In meetings, keeping a list we call the "parking lot" is a fairly standard practice. As the discussion unfolds, we "park" there any items that arise that aren't on the agenda, but which we believe could be important someday soon. Here are some tips for making your parking lot process more effective.

See also Personal, Team, and Organizational Effectiveness for more related articles.

Forthcoming issues of Point Lookout

A shark of unspecified speciesComing May 2: Narcissistic Behavior at Work: VII
Narcissistic behavior at work prevents trusting relationships from developing. It also disrupts existing relationships, and generates toxic conflict. One class of behaviors that's especially threatening to relationships is disregard for the feelings of others. In this part of our series we examine the effects of that disregard. Available here and by RSS on May 2.
Jump ball in a game of basketballAnd on May 9: Unethical Coordination
When an internal department or an external source is charged with managing information about a large project, a conflict of interest can develop. That conflict presents opportunities for unethical behavior. What is the nature of that conflict, and what ethical breaches can occur? Available here and by RSS on May 9.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenTQeNtIAEbnLTAWeGner@ChacDYJPOquzyXIxcrefoCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

Reprinting this article

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500 words in your inbox in one hour. License any article from this Web site. More info

Public seminars

The Power Affect: How We Express Our Personal Power
Many The Power Affect: How We Express Personal Powerpeople who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.

Follow Rick

Send email or subscribe to one of my newsletters Follow me at LinkedIn Follow me at Twitter, or share a tweet Follow me at Google+ or share a post Subscribe to RSS feeds Subscribe to RSS feeds
The message of Point Lookout is unique. Help get the message out. Please donate to help keep Point Lookout available for free to everyone.
Technical Debt for Policymakers BlogMy blog, Technical Debt for Policymakers, offers resources, insights, and conversations of interest to policymakers who are concerned with managing technical debt within their organizations. Get the millstone of technical debt off the neck of your organization!
Go For It: Sometimes It's Easier If You RunBad boss, long commute, troubling ethical questions, hateful colleague? Learn what we can do when we love the work but not the job.
303 Tips for Virtual and Global TeamsLearn how to make your virtual global team sing.
101 Tips for Managing ChangeAre you managing a change effort that faces rampant cynicism, passive non-cooperation, or maybe even outright revolt?
101 Tips for Effective MeetingsLearn how to make meetings more productive — and more rare.
Exchange your "personal trade secrets" — the tips, tricks and techniques that make you an ace — with other aces, anonymously. Visit the Library of Personal Trade Secrets.