Bonuses can buy more of a behavior, but rarely create it

Many leaders, almost by default, reach for incentives when they want to improve performance. But while incentives obviously matter, they are not the most important driver of human behavior.

Imagine walking down the street. You find a wallet on the ground. You look around. No one is watching. Do you pocket the money, or do you try to return it? The incentives are basically the same for everyone. And yet people make different choices, because they have internalized different habits as normal.

Let’s see another example. If someone already smokes ten cigarettes a day, you might be able to pay them to smoke a few more. But if you pay them to stop, that is much harder. And if you pay a non-smoker to start, that is hard too.

So, incentives can amplify behavior, but habits decide it.

We see that everywhere. Bonuses can shape intentions, but it’s habits that shape actions. And performance depends on actions, not intentions. After all, if intention were enough, everyone would go to the gym, eat well, and never procrastinate.

Let’s see one last example, this time in business. A leader sees poor sales performance and changes the bonus scheme. A month later, nothing important has changed. That’s because the bottleneck was not compensation, but that people still avoided hard calls, still postponed follow-ups, still softened the ask, still failed to prepare, still interpreted rejection emotionally.

When habit is the bottleneck, changing the incentive rarely changes the outcome. At most, incentives can get you a few more calls. But the quality stays the same. The hesitation is still there. The preparation is still weak. The conversation still follows the same pattern. So you get more of the same behavior, not better behavior.

Again, bonuses can buy more of a behavior, but rarely create it.

So, what can you do when habit, not incentive, is the bottleneck?

That will be the topic of next week’s blog post. But for the moment, keep in mind the following question: Do you have an incentive/desire problem or a habit/skill problem? Different problems require different solutions.

Of course, changing the habits within an organization is part of my advisory work.