Illusory Incentives

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 valueTry 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.  Top    Next Issue

Are 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

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:

Games for Meetings: IV

We spend a lot of time and emotional energy in meetings, much of it engaged in any of dozens of ritualized games. Here's Part IV of a little catalog of some of our favorites, and what we could do about them.

Changing the Subject: II

Sometimes, in conversation, we must change the subject, but we also do it to dominate, manipulate, or assert power. Subject changing — and controlling its use — can be important political skills.

Asking Clarifying Questions

In a job interview, the interviewer asks you a question. You're unsure how to answer. You can blunder ahead, or you can ask a clarifying question. What is a clarifying question, and when is it helpful to ask one?

How to Make Good Guesses: Tactics

Making good guesses probably does take talent to be among the first rank of those who make guesses. But being in the second rank is pretty good, too, and we can learn how to do that. Here are some tactics for guessing.

Red Flags: III

Early signs of troubles in collaborations include toxic conflict, elevated turnover, and anti-patterns in communication. But among the very earliest red flags are abuses of power. They're more significant than other red flags because abuses of power can convert any collaboration into a morass of destructive politics.

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

Forthcoming issues of Point Lookout

Coming February 3: Cost Concerns: Scale

When we consider the costs of problem solutions too early in the problem-solving process, the results of comparing alternatives might be unreliable. Deferring cost concerns until we fully understand the problem can yield more options and better decisions. Available here and by RSS on February 3.

And on February 10: Remote Hires: Communications

When knowledge-oriented organizations hire remote workers, success is limited by the communications facilities they provide. Remote hires need phones, computers, email, text, video, calendars, and more. Communications infrastructure drives productivity. Available here and by RSS on February 10.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenhZLYrRMtUnyjppRsner@ChacotqZAFalhYTBMgJWoCanyon.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:

• Get 2001-2 in Geese Don't Land on Twigs (PDF, )
• Get 2003-4 in Why Dogs Wag (PDF, )
• Get 2005-6 in Loopy Things We Do (PDF, )
• Get 2007-8 in Things We Believe That Maybe Aren't So True (PDF, )
• Get 2009-10 in The Questions Not Asked (PDF, )
• Get all of the first twelve years (2001-2012) in The Collected Issues of Point Lookout (PDF, )

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 500-1000 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 people 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.

• A recording of a program presented June 29, 2017, Monthly Webinar, sponsored by Technobility Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
   
• A recording of a program presented June 29, 2017, Monthly Webinar, sponsored by Technobility Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
   

Bullet Points: Mastery or Madness?

Decision-makers in modern organizations commonly demand briefings in the form of bullet points or a series of series of bullet points. But this form of presentation has limited value for complex decisions. We need something more. We actually need to think. Briefers who combine the bullet-point format with a variety of persuasion techniques can mislead decision-makers, guiding them into making poor decisions. Read more about this program.

• A recording of a program presented June 24, 2020, Monthly Webinar, sponsored by Technobility Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
   
• A recording of a program presented June 24, 2020, Monthly Webinar, sponsored by Technobility Webinar Series. PMI members can earn 1.0 Category 'A' PDU by viewing this program. View this program now.