Absolutely false, more on that later.  Here are a couple of other ways the myth is presented.

“If I just get the incentives right, every thing will fall into place”

“Maybe I should tinker with the incentive pay, that will get them back on track”

If you find yourself saying these things, stop immediately and consider the following.

Incentive pay always comes too late to influence the actions of an individual.  It’s hits the paycheck long after the key activity occurs that delivers the outcome you want.  It’s uncertain at the time you want to key action to occur.  And it’s perceived  as a negative by the person you are trying to motivate.  You heard me right,  this is how most people see an incentive, “I have to do this to avoid getting my bonus.”

Instead, take a look at the feedback your organization is providing when the individual performs the actions you desire..  Is it positive? Is it immediate? Is it certain (no waffling)?  Figure how how to deliver positive, immediate, and certain feedback or reinforcement.

Consider that you have the wrong person trying to perform the action.  Consider that they don’t know how to do it.

Consider that maybe you are getting in the way.

Jim Collins’ research in all his books confirms that pay plans have no difference on the positive performance of top executives and leaders.  Might even be a negative impact on, or a distraction from making good decisions.

Pick up a copy of Drive, by Daniel Pink and pay attention.  It completely refutes the myth of incentive pay.  It’s not motivating in most situations and is a non motivator most of the time.   Carrot and stick doesn’t work in today’s world.  He presents irrefutable evidence of this.

That being said, I’m sure you’ll find it surprising to hear me say that I’m entirely in favor of incentive pay.  Don’t eliminate it.  Lots of great reasons to use it.  We’ll discuss this in another post some time.

Just don’t expect it to replace real leadership and real management.