The Impact of Incentives

In 2011, the noise with Occupy Wall Street, the troubles of the sovereign debt in Europe, and the fall of MF Global under the leadership of Jon Corzine provided me the background music for a project on incentive-pay programs for managers and warehouse employees. When I examined three different plans, a trend appeared.

Behavior change is the goal for incentive plans. You can reward or punish. Two plans focused on changing the behavior of individuals, while the third focused on changing the behavior of organizations. Each plan was vastly different. One focused on productivity. The second focused on safety. The third focused on quality. And each used an economic incentive.

One failed. The safety effort did not reduce lost time. Incentives got paid, but the numbers did not change.

Why?

Perhaps this video from Daniel Pink will help you understand the potential.

We have the video as a download – and perhaps can embed.