It sounds almost too easy: reward your employees for desired behaviour, for example, by giving them a bonus if they reach their sales goals early and watch productivity rise. Incentives are indeed a great way to motivate staff to work harder, and there's a reason why the incentive industry is worth an estimated $27 billion. Incentives such as badges or points are also a staple in gamification design and are known to increase motivation, foster friendly competition, and positively influence productivity.

However, if not implemented carefully, incentives can become dangerous. How dangerous? As much as a $3 billion lawsuit dangerous, among other risks.

Discover why incentives must be used carefully in workspace settings, why they aren't always the best way to motivate employees, and how you can still implement them and see your desired results.

What Are Incentives in a Workplace Setting?

Workplace incentives are rewards or privileges offered to employees to enhance job performance and align with company values. Incentives can be:

• bonuses,
• company merchandise,
• experiences like sponsored lunches or concert tickets,
• vacation days,
• team-building activities,
• further trainings,
• charity donations in employees' names
• and gifts for work anniversaries or achievements.

Using incentives in the workplace is a double-edged sword. While they aim to motivate employees, they might not appeal to all staff members uniformly. Some employees may value recognition, while others prioritise financial compensation. Moreover, offering rewards can inadvertently discourage those who find intrinsic satisfaction in their work or prefer to avoid being associated with specific rewards. Incentives can also lead to unethical behaviour when employees try to game the system.

The $3 Billion Lawsuit That Put Incentives on the Map

What do you do when you're a manager at a bank and want to increase sales of new accounts? You create an extensive incentive program for your staff, tie it to sales targets, and watch the money roll in. At least this was the strategy of Wells Fargo in the mid-2000s. Employees were offered bonuses and other incentives based on the number of accounts they opened, loans sold, and cross-selling success. Initially, it seemed to work. Motivated by the incentives, employees doubled down on their work, and the company saw a significant increase in new bank accounts.

Except, this increase wasn't entirely due to the amazing new sales tactics of Wells Fargo staff. Employees, driven by aggressive sales targets and incentive programs, engaged in fraud to meet goals and receive rewards, secretly opening accounts of people who never signed up for them in the first place.

The intense focus on meeting sales targets and earning incentives led to a widespread culture of prioritising quantity over quality. Real customer needs were sometimes overlooked, and employees were primarily driven by the desire to maximise their bonuses. In 2016, regulators uncovered the practice, resulting in a $3 billion lawsuit severely damaging the bank's reputation.

The scandal underscores how workplace incentives can encourage unethical behaviour – with disastrous consequences.

Why do Incentives Fail?

Incentives can misfire when they breed a culture of short-term gains over long-term success, fostering an environment ripe for unethical shortcuts and damaging trust within the organisation. Consider these reasons why incentives might not work as intended:

Misaligned Goals: Incentives can fail when they are not aligned with the organisation's overall objectives. For instance, if sales incentives prioritise quantity over quality, employees may focus on short-term gains rather than long-term customer satisfaction.

Unethical Behaviour: Incentive programs can lead to unintended behaviours. The Wells Fargo scandal is a prime example of aggressive sales targets incentivising employees to commit fraud.

Short-Term Focus: Incentives that emphasise immediate results can hinder long-term strategic thinking. Employees may prioritise meeting short-term goals for rewards, neglecting the bigger picture and sustainable growth.

Individual Preferences: Not all employees are motivated by the same incentives. While some may value monetary rewards, others may prefer recognition or opportunities for growth.

How to Make Incentives Work

By now, you might be tempted to give up on incentives entirely. Not so fast. Incentives can still be a force for good. They are a popular gamification feature for a reason, and shying away from them entirely might do more harm than good.

Gamification incentives in the workplace can be a powerful tool when used positively. By integrating game elements like points, badges, and rewards into daily tasks or training, employees can feel more engaged and motivated. Gamified training materials make learning more interactive and enjoyable, leading to better knowledge retention and skill development. Moreover, gamification fosters friendly competition and provides clear goals and feedback, tapping into employees' intrinsic motivation.

So, the short answer to whether you should use incentives anyway is yes. But with intention. Let us show you how.

Implementing a Successful Incentive Strategy With Gamification

Incentives can come in many shapes and forms. There are the obvious monetary rewards, but even without cash for bonuses, you can create exciting incentives that work. If your employees value education, working through lessons and being rewarded with access to new courses or tuition coverage might be a great way to motivate them. Donating to a charity of their choice can be inspiring and an opportunity for companies to commit to positive values and the social good. Incentives don't always have to be massive events. A simple coffee hour for your team or even creating an employee-of-the-month award (maybe with a funny twist) can work.

In any case, implementing a gamification incentive system can be a powerful strategy to boost employee engagement and motivation. To ensure its success, consider these best practices:

1. Clear Objectives: Define objectives for the gamification system that align with the company's goals and values. Whether improving sales, enhancing customer service, or fostering teamwork, be clear about what you expect from your staff and what they might expect from you.
2. Engaging Design: Create a visually appealing, intuitive gamified system that aligns with the company culture. Incorporate diverse elements like points, badges, leaderboards, and rewards to make the experience engaging and enjoyable for employees and address different learning styles.
3. Fairness and Transparency: Ensure that the gamification system is fair and transparent. Clearly communicate the rules for earning rewards, and how performance is measured to avoid employee confusion or resentment.
4. Training and Support: Provide training and support to help employees understand how the gamification system works and how they can actively participate. Encourage open communication and address any concerns or questions promptly.
5. Continuous Evaluation: Regularly evaluate the effectiveness of the gamification system through feedback surveys, performance metrics, and employee engagement levels. Use this data to make adjustments and improvements to keep the system relevant and engaging.

The most important thing to remember is that incentives never work in isolation. You have to embed them in a gamification ecosystem that allows you to monitor and track progress and offers a variety of rewards and challenges. If you want to avoid unintended consequences and behaviour, never overemphasise incentives and find ways to create intrinsic value in the work.

Incentives have to be taken seriously if they are to work, and it can be daunting to implement a whole incentive system. If you need help figuring out where to start, talk to us. We are happy to walk you through the different types of incentives and how to use them best in your specific context.