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Leaders, be careful what you reward

3 min read


The recent criminal indictments of 35 Atlanta school administrators and teachers at the root of that district’s test-cheating scandal show just how far some people will go when incentives are so lucrative.

Other school systems — including those in New York, Washington, D.C., Philadelphia, Baltimore, and El Paso, Texas — have experienced similar cheating on standardized tests. “Responsible adults” changed student answers on tests so scores would improve.

I don’t suggest the blame lies with No Child Left Behind or the current Race to the Top efforts. They are well-intended but place emphasis on reading and math test-score improvements, not on learning by students.

With increased scrutiny on test scores, those test scores went up. However, as retesting showed, test-score gains were not due to increased learning on the part of students. The gains were entirely due to test answers being changed so it would look like learning was taking place.

The speed of the test-score improvements did not raise questions. It was a “too good to be true” result that took dedicated investigation by news reporters to shed light on these practices.

I believe the blame lies with the rewards that those administrators and teachers enjoyed when scores improved so quickly. For example, the Atlanta school superintendent was paid $580,000 in performance bonuses due to rising test scores. In 2009, those same improvements led to her being named superintendent of the year by the American Association of School Administrators.

This is a classic case of unintended consequences, where the rewards offered don’t create the desired behaviors.

Financial incentives sound like the answer to all of management’s problems. Incentive programs are quick to implement. Leaders implement them, believing that the right incentives will cause people to demonstrate desired behaviors.

The reality is that, too often, pure financial incentives drive undesirable behaviors. People can easily see that the incentives reward the result, not the “right ways to get there.” So, they take shortcuts and take the money (or fame or whatever the incentives provide).

Research into the fallacies of financial incentives to drive desired behavior has been going on for over three decades. For further information, see this article from the Stanford Graduate School of Business on Jeffrey Pfeffer’s 2007 book, “What Were They Thinking?” Also, this article from Knowledge@Wharton, “Problems with Financial Incentives,” and Daniel Pink’s book, “Drive: The Surprising Truth about What Motivates Us.”

Leaders, be careful what you reward. Examine your recognition and incentive programs to see if they might be driving undesired behaviors. Add incentives that validate desired ways for people to interact with bosses, peers and customers. Doing so creates a foundation of shared values and behaviors that inhibit unethical plans, decisions and actions.

What is your experience with financial incentives? Have you seen undesirable effects or have you seen mostly desirable behaviors occur? Share your thoughts in the comments section below.

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