You Can't Incentivize Performance

11 Feb 2020 · 1 min

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1:10

Speaker argues you cannot directly incentivize an outcome—only the behaviors that might produce it—and that high-pressure, outcome-only incentives can produce unethical or counterproductive behaviors (e.g., hoarding information, backstabbing). The speaker contrasts short-term, finite thinking in business with an 'infinite game' mindset as a more sustainable context for organizational behavior.

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You can't incentivize an effect. You can only incentivize the cause that would hopefully yield that effect, which is behavior. So if I say to you, I will give you a massive bonus if you hit a certain target at the end of the year, no matter what. What you're incentivizing is that I will do certain things to achieve that goal that you set for me. But the problem is, is when we apply excessive amounts of pressure, and it's at all costs, like my very livelihood depends on that, it can accidentally incentivize some quite unseemly behaviors, like hoarding information, right? Because this is what gives me my value. And I don't want to share information or things that I've learned with my colleagues and coworkers, which is madness or unethical behavior, stabbing other people in the back. And this is one of the problems with, I think, our modern business today, which is too much of businesses is run right now with an excessive amount of finite thinking. Now, there are always finite games within the infinite game. The infinite game, however, provides the context. And without that infinite mindset, all you have is win, win, win, win, win, win, win, which is unsustainable.