Why predictable incentives don’t work too well

27 Sep
2017

I see incentives as an intersection of two traits

How predictable are they?

How accurate are they?

Predictability:

Do I know of them beforehand

Can I predict what they are

Do I have an understanding of how it works

Accuracy:

Are they correctly measured?

Are they accurately delivered?

Are they tracked correctly?

If you think of a 2×2 matrix

The worst box clearly is the unpredictable-inaccurate box

This will lead to noting but resentment. And ultimately failure to drive the intended outcome

But the best isn’t the predictable and accurate one

In my experience, the unpredictable and accurate box drives the best outcome

As humans, we so want to settle

To capture the known

To make things predictable

And so with predictable incentives – it quickly becomes the new normal for those who hit it

And that depresses the impact, because the ones hitting it drive a larger sure Kd the performance.

In other words

“We are measuring your performance based on sales at the end of this month”

Predictable: if you hit the target you get 10% incentive

Unpredictable: if you hit the target you will get an incentive

This approach may seem stupid, because why would anyone be driven some undisclosed incentive scheme?

And surely – they perhaps won’t be

Until, at the end of the month when they see that you reward the ones that hit their target (and some always will)

Leaving the next months’ incentive as a surprise again

Variable rewards, changing rewards, dynamic rewards, surprise rewards

These types, when matched with accuracy, work like magic!

People react best when they are rewarded when they least expect it.

1 Response to Why predictable incentives don’t work too well

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Savita Amit

October 2nd, 2017 at 8:21 pm

Unexpected reward is the biggest motivational driver….it pushes you to go beyond your limits and achieve greater heights….

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