We try to do what we think is good, whether that means encouraging our kids to get good grades, persuading teams to collaborate, or pushing political leaders to unite on an issue impacting community health. Whenever we advance development, we are upsetting the status quo. Development introduces incentives, some of them intentional and others unintentional. Yet often, our intentional incentives actually undermine the likelihood that people, teams and organizations will engage in the desired behavior. This article discusses how to identify and leverage positive incentives and how to avoid perverse ones — in our personal lives, within our own organizations and in the organizations we serve.

“Perverse” incentives undermine the central purpose of what we are trying to accomplish. Let’s take an example close to home. Many of us have kids who do well in school but could probably get better grades if properly motivated. Some parents might introduce money as a reward for A’s. This seems like a pretty good approach if it gets the child to focus on grades. Research regarding what motivates us, however, points to a different outcome, finding that financial incentives “crowd out intrinsic motivation and negatively affect performance.” Here is how it works: The incentive — money, an extrinsic motivator — becomes the object of one’s affection. When we need to be intrinsically motivated to perform a task, the money becomes a distraction. Extrinsic motivators also tend to diminish our creativity, an important component of learning. In the case of good grades, a better approach would be to focus on learning, knowledge, or the competence to do a new thing as the motivator. Having a conversation in which the student talks about why the subject is important more broadly may also instill a better sense of purpose into the conversation.

Per diem

Does this ever happen in development? Sure. It’s not uncommon to find people citing per diems and sitting fees as their reason for attending training. In those cases, the knowledge or training itself is not the reward. Improving team or organizational performance is not the reward. It is the cash. While we need to adequately and equitably remove barriers to participation in training, we also need to consider that the per diem cannot become the point of the training or workshop in the minds of participants, because this thinking undermines the value they put on the training itself. Ideally, the training is connected to an individual’s goal of helping his or her organization engage in sustained performance improvement. The employee sees himself or herself as connected to the goal and the training as a way to help achieve the bigger objective.

A promising practice

Similarly, people tend to assign less value to things — including trainings — they perceive as “free.” I learned this in college when I facilitated workshops on parliamentary procedure or served as parliamentarian. While I was happy to play these roles for free, I found that organizations valued the training and expertise less when I was not asking for compensation. If they paid even a nominal fee, they were much more invested and engaged. A promising practice we uncovered in a recent large-scale study on capacity development was on organizational contribution. It works like this: The “client” organization contributes something to the training event or workshop. The contribution could be the venue, support staff, lunch, or some other provision to make the event happen. Having “skin in the game” increases commitment and just having the conversation about mutual contribution to an event shifts the power dynamic in a wholesome way. The organization is not some helpless entity that has nothing to contribute to its own success. You are working with the organization to solve a problem or exploit an opportunity that you both see, so of course, you would want to work together.

Other perverse incentives arise when we introduce metrics that are not in the interest of the organization’s long-term health. In development, we do this by measuring things that don’t matter, such as the number of trainings held, while neglecting to measure performance improvement metrics the organization — cost reduction, cycle time decrease, stakeholder satisfaction increase, etc. — should track. In our own organizations, this may be around metrics that drive a short-term gain, but that is distracting (neutral) or negative (undermining) in the long term. A much-publicized recent example is the relentless push by Wells Fargo’s managers for employees to open new client accounts, which crowded out normal ethical behavior of staff, undermined morale, and resulted in sanctions against the firm.

Good news: You can (almost always) get it right

The best news about finding positive incentives is that if you focus on a group’s highest purpose, you will almost never make a mistake in motivating staff and stakeholders. A few years ago, I was called upon to facilitate a board retreat for a national medical supply agency that was challenged by frequent life-threatening stock-outs at the medical facility level, supply theft and wastage due to drug expiration that translated into a hefty percentage of their annual budget.

The board members had a reputation for being corrupt. For the retreat itself, their only interest was in their “sitting fee.” Through a highly choreographed retreat experience, they dealt with what was on their minds by re-contextualizing the “sitting fee” in terms of the health care it bought an average citizen and opened their imaginations regarding what the organization might be able to achieve. One output was a giant mural depicting how a well-functioning agency would impact everyday life. This reframing of the organization’s purpose stoked a motivation for change.

This connection, or re-connection, with one’s intrinsic motivation is good for the individual as well as the organization since studies show that while attaining extrinsic aspirations correlates to indicators of ill-being, attaining intrinsic aspirations correlates to indicators of well-being. So not only does it work for the organization achieving its goals, it is good for the individuals within the organization to think about the fruits of their labor in terms of the larger good that their work creates. This works in development as well as in our own organizations.

Blog posts on the MSI website represent the views of the authors and do not necessarily represent the views of MSI.