Research library Metrics and incentives
You Get What You Reward, Not What You Hope For.
In 1975 Steven Kerr collected examples, from war and medicine to universities and business, of reward systems that pay for one thing while hoping for another. It still reads like a sales comp review.
Steven Kerr, 1975 (updated 1995)
What he was looking at
Steven Kerr, a management professor, kept seeing the same pattern in politics, war, medicine, universities, sports, government and business: reward systems that “pay off” for one behavior “even though the rewarder hopes dearly for another,” in the words of his 1975 abstract.
What he found
People aren’t confused about rewards. They look for them:
“most organisms seek information concerning what activities are rewarded, and then seek to do (or at least pretend to do) those things” Kerr, 1995 reprint, p. 7
His examples include an insurance company whose rules, as he tells it, ended up paying for showing up rather than for doing the work well:
“the firm was hoping for performance, while rewarding attendance. What it got, of course, was attendance.” p. 11
Kerr named four reasons organizations end up here:
- a fascination with “objective” criteria, which are easy to count;
- too much weight on behaviors that are highly visible;
- hypocrisy, where the stated goal and the real one differ;
- putting morality or equity ahead of efficiency.
The paper almost didn’t make it. In the 1995 reprint Kerr recalls that it was turned down for presentation at the Eastern Academy of Management, and got into the Academy of Management Journal only because the editor “broke a tie between two reviewers.” Twenty years later the Academy reprinted it, with Kerr’s update.
What it means
If what you reward and what you hope for point in different directions, the reward wins. That’s not a character flaw in the people you’re paying. It’s them reading the plan correctly.
The fix starts with an honest look at what the plan actually pays for, which is often not what the slide says it’s for.
Where it shows up in a revenue team
- Pay per appointment and you get appointments. Pay on units and you get units.
- “Objective” is often code for “easy to count”. Meetings booked, MQLs and logos closed are easy; value is harder, which is exactly why it goes unrewarded.
- Read your own comp plan the way a rep would. What’s the fastest way to hit it? If the answer isn’t “bring in the customers we want most,” the plan is rewarding A.