Why Incentives and Rewards Often Fail to Change Behavior

The Incentive Assumption

When behavior does not change, many organizations reach for incentives: bonuses, recognition, gamification, performance-linked rewards. The assumption is that if the reward is large enough or visible enough, behavior will follow. This is a motivation-first approach, and it works in limited circumstances.

When Incentives Work and When They Do Not

Incentives work when motivation is the actual barrier and the person has both the capability and the opportunity to perform the behavior. If someone knows how to do something, has the tools and time to do it, and is choosing not to because the reward structure does not favor it, an incentive can tip the balance.

Incentives fail in three common scenarios. First, when the barrier is capability: offering a bonus for using the new system does not help if the person cannot operate the system efficiently under real conditions. Second, when the barrier is opportunity: rewarding CRM data entry does not help if the CRM takes twelve minutes per entry and the old system took three. Third, when the incentive creates perverse effects: rewarding quantity over quality, gaming behaviors, or short-term compliance that evaporates when the incentive is removed.

The behavioral science perspective: incentives are one strategy card ('Alter Incentive Structures') within a toolkit of 33. They address one sub-category of motivation (reflective motivation, specifically beliefs about consequences). Using them as the default response to every behavior change problem is like prescribing the same medication for every illness.

The Alternative Approach

COM-B diagnosis first. If the behavior is not happening, identify whether the barrier is capability, opportunity, or motivation. If it is motivation, identify which kind: is it beliefs about consequences (incentives may help), beliefs about capability (self-efficacy support is better), social identity (reframing is better), emotional response (reducing threat is better), or habit strength (environmental redesign is better)?

The matched intervention is often not an incentive at all. It might be peer teaching (for capability barriers), environmental redesign (for opportunity barriers), social proof (for social motivation barriers), or implementation intentions (for habit barriers). The diagnosis determines the prescription.

Incentives address one narrow motivation sub-type: beliefs about consequences. When behavior does not change despite incentives, the barrier is elsewhere. Diagnose before designing the reward.