Why I Fear Incentives

I have talked with many business owners who offer incentives in some fashion.  I have also heard stories of how many of these have backfired or the owner is frustrated with the entitlement mentality that develops.  I will share my story.

Many years ago, one of my managers proposed an incentive he thought would highly motivate our sculptors on a particular project.  I thought it was a good idea and we presented it, in writing, to a few of our lead artists.  We told these artists that if they beat their time goals by 5% we would offer so much, if they beat them by 10% we would offer them a little more and if they beat them by 15% we would offer even more.  Beyond that we thought quality would suffer.  Their work had to be approved by our Art Director.

The project went very well.  The work was some of our best and the team beat their time goals by more than 20%.  As we had agreed in writing, I gave out checks to this small group of artists for the 15% bonus amount.  I had also recently given an end of year bonus that was quite large.  Right after giving out the checks the artists came into my office together.  They had checks in hand and demanded more.  I was shocked.  I thought I had been extremely generous.  I paid them more than our agreed upon salaries to do what their job descriptions required in the first place.  I had just given out other bonuses, too.  They took home several thousand dollars more than usual.  I, of course, said “no” to their demands and was hurt that they were not more appreciative of the extras I had given already.

On the next several projects, productivity and attitude spiraled down hill with some of these artists because  I was not offering the same incentive.  I assume they thought they should share in all profits going forward.  Of course, they didn’t think of paying for the losses and taking the risks, too.  Behavior really began to become unprofessional as time went by.  One of the artists wrote FU on the back of a groundform we fabricated.  Another took a knife to insulation in one of our newly constructed buildings.  Their attitude and behavior was shocking.  In the end, after several months, two of them were let go from the company.

I have never offered this type of incentive again.  Since then, I have read articles like the this one by Alfie Kohn that discusses why incentives don’t work.  Daniel Pink’s latest book Drive also discusses how some rewards do not motivate us.  Personally, I have been motivated by potential rewards.  For instance, I chose to study business instead of equine science, so I could buy my own horse.  Even so, I am still leery of offering incentives.

What motivates you?  Would you offer incentives?