More than money — how do you design incentive systems that drive behavior?
When people in organizations talk about their incentive systems, inevitably the conversation involves compensation. Often, it stops there. But the wonderful work of Steve Kerr and others demonstrates that many things in your incentive system can influence behavior — well beyond the money.
Money is the least imaginative thing to think about when you consider rewards
Over the years, I’ve been highly influenced by Steve Kerr, who worked with both GE and Goldman Sachs and is absolutely brilliant on the topic of how to change behavior in an organization. As he points out in a recent interview, designing an effective rewards system means that leaders need to define, measure and reward performance. It’s critically important to have clear, shared, agreed upon, overarching goals, otherwise you have no idea what behavior you are trying to prompt.
Kerr’s research has shown that a predictable number of factors can make a reward more or less powerful in incenting desired behavior. Think of it as ABC — antecedents -> behavior -> consequences. If you want different consequences, you need different antecedents!
