A cautionary tale on why some incentives programs don’t work and how to recognize the warning signs early. We share the essential Do’s and Don’ts of planning a great rewards and recognition program.


In this month’s issue of Fast Company, authors Dan Heath and Chip Heath look at why incentive programs can backfire. They give the example of former NFL player Ken O'Brien who threw too many interceptions during games so one of the team’s lawyers wrote a clause in O'Brien's contract penalizing him for every interception he threw. It was an attempt to use an incentive to make O’Brien perform better. It backfired - O’Brien simply stopped throwing the ball.

Using examples from previous incentive programs run at AT&T and Merrill Lynch, Dan and Chip Health argue that incentives – whether they are in the corporate or sports world, don’t work because too often, incentives are reduced to simple and unclear variables.

We however, took a closer look and uncovered key mistakes made in the planning stage of each example that Dan and Chip Heath provided. Let’s look at the mistakes made in the O’Brien example:

- The lawyer set out to change behaviour with a negative consequence hoping to get a positive result.

- The lawyer failed to see the big picture. It’s not the number of interceptions that needed to be reduced. It’s the number of completions that needed to be increased.

- There was no training or support provided by O’Brien’s coaches to help him improve. You can’t expect a different end result when you don’t make any changes along the way.

It’s not the concept of incentives that failed because O’Brien did in fact change his behaviour. It’s that the desired result was improperly defined in the planning stage. So, how can employers do incentives right? We’ve put together a cheat sheet of the Do’s and Don’ts of planning a great rewards and recognition program.


The Do’s
1. Clearly define the desired result you want to drive and then the behaviours it takes to achieve the result. It’s the first step and it’s essential!

2. Make the results attainable and ensure that managers and leaders are on-board. Without their support or willingness to help employees achieve the desired end result, the program will never take off.

3. Make the incentive a . The employee needs to be encouraged to perform an activity not penalized for it. Positive incentives are a faster, more effective way to get results. For example, O’Brien’s lawyer should have offered a reward for increasing the number of completions O’Brien made per game.

4. Choose program champions that will drive the implementation process, build momentum and stay on top of the program with employees, vendors and the executive team.


The Don’ts
1. Reduce the incentives to a single variable. There is no one perfect carrot! Incentives need to be tailored to the corporate goals, culture and employees, and will evolve over time.


2. Rely on incentives as the sole way to motivate employees to perform. This is dangerous territory because employees will see the incentive as a carrot on a stick.

3. Cast your net too wide. Stay focused on the defined behaviours you set out to drive. Otherwise, you will dilute the impact of the incentive and reward.

4. Forget to include a way or method to track and validate the rewards given out. Metrics and tracking must be included in the planning stages in order to properly execute and evaluate the success of the program.