Why Incentives Are Effective, Irresistable, and Almost Certain to Backfire

http://www.fastcompany.com/magazine/132/made-to-stick-curse-of-incentives.html


Fast Company
Why Incentives Are Effective, Irresistable, and Almost Certain to Backfire
By: Dan Heath & Chip HeathFri Jan 16, 2009 at 1:32 PM

Ken O'Brien was an NFL quarterback in the 1980s and 1990s. Early in his career, he threw a lot of interceptions, so one clever team lawyer wrote a clause into O'Brien's contract penalizing him for each one he threw. The incentive worked as intended: His interceptions plummeted. But that's because he stopped throwing the ball.

Years ago, AT&T executives tried to encourage productivity by paying programmers based on the number of lines of code they produced. The result: programs of Proustian length.
Incentives are dangerous, and not just because people game them. They often yield collateral damage.

Read Full Article: http://www.fastcompany.com/magazine/132/made-to-stick-curse-of-incentives.html

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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.