Do performance related incentives work? And, are they right?


We got to thinking about this after hearing about a performance related incentive trip which involved over 12,000 km of travel – that is quite a big investment for a company but is it one worth making in today’s world?


The two main questions we felt needed answering were:
a) is it the right thing to do and
b) does it actually incentivise staff?


Hitting the search engines we started looking at academic research that had been carried out in the last few years on incentivising staff and what we found was very interesting and actually blindingly obvious when you thought about it!

Starting with the definition of an incentive, we were happy to go with:

An object, item of value or desired action or event that spurs an employee to do more of what you want them to do as an employer.

This then raised the question of ethics. Is it right to use incentives as a form of power to get people to do things that they may otherwise not do?

What do you think? Another blog for another day we thought…

Bill Becker, associate professor of management of Pamplin College of Business at Virginia tech wrote in Science Daily in 2018 that:

“Goal fixation can have a profound impact on employee behaviour, and the damaging effects appear to be growing stronger in today’s competitive business landscape.”

His findings suggested that setting incentivised goals (rewards) can increase dishonesty, unethical behaviour, increased risk-taking and depletion of self-control. Not exactly the desired consequences that any employer would be looking for!

This was more noticeable when the incentives were individually driven, that is earned by only one person. Why would a team work together to achieve a common goal if they didn’t all get the same prize and, if they got the same prize it would no longer be a reward for the individual? Worse still, you could in fact be rewarding bad behaviour unintentionally as workers undermine each other to get to the prize.


Do incentives actually work?

Moving on we wanted to answer the question as to whether it actually incentivised staff to offer a reward of this kind.

An article we tracked down in the Harvard Business Review* looked at why incentive plans couldn’t work and offered up even more insight into the psyche behind our reactions and conditioning to rewards.

The article said that at least two dozen articles, published over 30 years, had found the same thing: people who expect to receive an incentive for completing a task or reaching a goal simply did not perform as well as those who expected no reward at all.

The report said:

Incentives, a version of what psychologists call extrinsic motivators, do not alter the attitudes that underlie our behaviours. They do not create an enduring commitment to any value or action. Rather, incentives merely—and temporarily—change what we do.”

The article went on to say that managers who insisted the job wouldn’t get done right without a reward of some type were those failing to offer convincing arguments.

Promising a reward to someone who appears unmotivated is a bit like offering salt water to someone who is thirsty. Bribes [AKA incentives] in the workplace simply can’t work, ”wrote Alfie Kohn.


In summary we found that the research told us that:

  1. Rewards are not lasting motivators; they are not a convincing reason to continue to behave in a certain manner if it is not in your nature.
  2. Rewards punish team effort and encourage feelings of failure if you weren’t the one winning.
  3. Rewards can rupture relationships. A team reward will show up the weakest link; an individual reward will create competition – and not always the sort you were hoping for!
  4. Incentivised rewards ignore reason – with the right people in place wanting to do the job, they are simply not needed.

So, from a couple of simple questions we drew our own conclusions but what do you think? Have you had experience of an incentive that really is motivating staff and been a catalyst for good in an organisation? Or conversely, have you experienced the down side of an incentive scheme? Please, do let us know…





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