“How aggressively should I incentivise people in my business?”

When you entice people to act in a certain way, you should always be very clear on one question: At what cost does such an incentive come?

From a distance, promises and threats seem to work.  If punishment is aversive enough, or a reward appealing enough, people tend to agree to quite extraordinary behaviour. However, when you think long and hard about the cost of an extreme incentive, you are normally confronted with three insights:

•  Manipulation doesn’t produce excellence.  Lasting outperformance is not a function of control.  Mechanistic incentives impede mature decision-making and self-determination.

•  When the means become the end, your business is going to suffer.  Incentives shape their own shortcuts.  They challenge moral behaviour.  They open up an unhealthy chasm between rewarder and rewarded.

•  The same incentive doesn’t work well twice.  Its influence vaporises – which means that you will have to improve on it to exert the same influence.  If you don’t, rewards will become an endless, unproductive area of contention.

Fair remuneration and constructive recognition are important, but we don’t think over-aggressive incentives lead to reliable long-term results.  Intrinsic motivation does.  When you have to dangle a big carrot or stick in front of someone to elicit focus and excellence, the person is most likely alienated from a task – or the work environment is inhibiting natural productivity.