Incentives Can Negatively Impact Employee Engagement if Used Improperly

Organizations want their employees to be more intrinsically engaged at work.  They want their employees to be more creative, more innovative, and to take more risks.  One of the ways organizations are supporting these initiatives is through the use of incentives.  While incentives can be a good way to drive short term behavior, you have to be careful that they don’t undermine long term motivation in your organization.

In his book, Punished By Rewards: The Trouble with Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes author Alfie Kohn points out that when reward and recognition is conditionally based, it can actually undermine performance by: 

  • Setting up a competitive atmosphere where some people win while other people lose 
  • Discouraging risk taking when employees fall back on what has worked in the past instead of trying new things which may or may not work 
  • Eroding natural interest by replacing intrinsic motivators with extrinsic ones

Perhaps most importantly, improper use of rewards and incentives can sometimes get in the way of good management.  This happens when managers rely to heavily on the use of rewards and incentives instead of drilling down on the reasons why employees may not be performing up to level. 

For organizations looking to improve the creativity, innovation, risk-taking and intrinsic motivation of their employees, Kohn recommends that leaders focus on three areas: 

  1. Rethink financial incentives.  Instead of putting so much emphasis on pay-for-performance, pay people a little more than industry norms and then do everything in your power to help them put money out of their minds. 
  2. Reevaluate evaluation. Make performance evaluation an ongoing process instead of a once-per-year event.  Make sure that it is a two-way conversation that is separate from conversations about compensation. 
  3. Create the conditions for authentic motivation.  Kohn recommends focusing on collaboration—helping employees work together, content—design meaningful jobs and help people find the value in their work, and choice—wherever possible, give people the opportunity to determine how the task will be accomplished.

Kohn is a provocative thinker in this area. For leaders looking for the complete picture on the use of rewards and recognition in their organizations, he offers a great alternative viewpoint on the use of incentives.  I highly recommend him to you and invite your thoughts and comments here.

2 thoughts on “Incentives Can Negatively Impact Employee Engagement if Used Improperly

  1. While I’m not a big fan of incentives for everything – I do want to caution using A. Kohn’s research in business context. All of the research cited was done with children and in a school setting on activities they ALREADY enjoyed. None of those particular criteria apply in today’s business world. It is a huge leap to apply the findings from those studies to adults in the business world.

    For a discussion on this issue see this post by Ann Bares:

  2. Hi David,

    Daniel Pink’s newest book “Drive” provides some interesting analysis on the dangers that can arise from “carrot and stick” models.

    While Mr. Pink shows some areas where carrot and stick may work, his presentation of the dangers inherent in their use provides for some eye-opening reading.

    Take care and create a great day!


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