Incentives Work. That's The Problem.
- Sam Lawford
- Jan 12
- 4 min read
Incentives aren't broken. They're working exactly as designed.
That's the problem.
You want people to do more of something. You attach a reward to it. People do more of it. Everyone wins.
Except that's not what happens.
The Proxy Trap
You want to improve customer satisfaction. But satisfaction is hard to measure in real time. So you pick something easier. Call handling time. Shorter calls mean more customers served, which means happier customers. Right?
So you incentivise short calls.
And you get short calls. Agents rush customers off the phone. Complex problems get half-solved. Customers call back. Satisfaction gets worse.
The incentive worked perfectly. It just worked on the wrong thing.
I've watched this play out in operations. A team was targeted on tasks completed per day. Completions went up. So did rework, because the number mattered more than the outcome. The dashboard looked great. The operation got worse.
The metric moves. The outcome doesn't. Or it moves in the wrong direction.
Goodhart's Law puts it simply: when a measure becomes a target, it ceases to be a good measure. The moment you attach a reward to a number, people stop trying to improve the thing the number represents. They just improve the number.
Gaming Is Inevitable
People aren't stupid. Create a game with rules and rewards, and they'll find the most efficient way to win.
Sometimes that means doing the work you intended. Often it means finding shortcuts that hit the target while missing the point entirely.
Wells Fargo wanted more accounts opened. Employees opened millions of fake ones.
The NHS wanted A&E patients seen within four hours. Hospitals held patients in ambulances outside so the clock didn't start until they entered the building.
Call centres wanted lower handling times. Agents started hanging up on complex calls to protect their stats.
Target hit. Problem unsolved. The incentive worked.
None of this is surprising. You get what you incentivise. Nothing more, nothing less.
The System Problem
Incentives assume that performance is mostly down to individual effort. Work harder, get rewarded. Slack off, miss out.
But most performance variation isn't caused by individuals. It's caused by the system.
If someone is slow, is it because they're lazy? Or because the tools are clunky, the process makes no sense, the information is buried across three systems, and they're constantly interrupted by work that shouldn't have reached them?
I've seen teams where the gap between the top performer and the bottom performer was essentially luck. Which calls they got. Which cases landed on their desk. Which days they were on shift.
Rewarding the top performer and punishing the bottom feels like accountability. It's actually just noise dressed up as management.
Incentives can't fix a broken system. They just pressure people to fight harder against the same obstacles.
Local Wins, System Loses
Even when incentives drive genuine effort, they often improve one part of the system at the expense of another.
Sales teams incentivised on revenue discount heavily to close deals. Revenue up. Margin gone.
Production teams incentivised on output push volume at the expense of quality. Units shipped. Returns through the roof.
Collections teams incentivised on cash recovered chase every debt aggressively. Cash up. Customer relationships burned.
Each team hits their number. The organisation gets worse.
The Motivation Problem
Attach a reward to something people already find meaningful and you can kill the motivation that was there to begin with.
The external reward crowds out the internal one. People stop doing it because it matters. They start doing it because they're paid to. Remove the reward and performance drops below where it started.
The things you most want people to bring to their jobs are the hardest to incentivise and the easiest to destroy.
What Actually Works
Stop asking "how do we motivate people to do the right thing?" Start asking "what's stopping them?"
Most people want to do a good job. They're not waiting for a bonus to care. They're frustrated by obstacles, confused by priorities, and exhausted by systems that fight against them.
Remove the friction. Fix the process. Make the right thing easy.
Measure outcomes at the system level, not individual performance. Track whether customers are actually satisfied, not whether calls are short. Track whether problems are solved, not whether tickets are closed.
If you must use targets, hold them loosely. Treat them as indicators, not goals. The moment a metric becomes the point, it stops being useful.
And trust people more. Excessive measurement signals that you don't trust people to do their jobs. That signal gets received. People respond by doing exactly what's measured and nothing else.
The Uncomfortable Truth
Incentives feel like leadership. You've set a target. You've attached consequences. You're driving performance.
But you're driving behaviour, not outcomes. And they're not the same thing.
If you need an incentive to make people do the right thing, something else is broken. Find that. Fix that.
The incentive is a distraction.
MintOps partners with UK organisations to identify and eliminate operational waste. If you'd like to discuss how a diagnostic could uncover hidden opportunities in your operations, get in touch
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