The Danger of Incentives

Everyone loves a bonus, right? Bonuses are good. If you're a student of languages, it's right there in the word. It's good (bon).

And yet, here I am building out a recruitment agency that offers zero commission to its recruiters. What sort of madman am I?

My rationale is this...

The incentives of today create the behaviours of tomorrow, which create the outcomes of next year.

Me, just now

Firstly, a step back to our world of marketing, where I'm seeing an increasing number of incentives being offered - especially in the US and in start-up world.

Marketers were often left out of bonus schemes. Too opaque, not tangible enough. And then came performance and demand generation, where numbers were clearer, results were more transparent, accountability could be found.

We're seeing some good incentives being offered to our candidates of late. Volume of production, contribution to pipeline, that kind of thing.

In each case, the incentive is designed to create a behaviour which is designed to influence an outcome.

In each case, our hiring managers have had to consider what those behaviours are, and whether the incentive is potentially causing a negative behaviour as well as, or instead of, the positive behaviour originally intended.

I'll return to Example - why do we not offer commission?

Because we want to encourage the following behaviours:

• Collaboration between recruiters on specific roles
• Sharing of potential candidates who may be a better fit elsewhere
• A consultative approach where a recruiter is free to say 'no'

And we want to discourage the following:

• Pushiness
• Personal disappointment when a hire falls through (it happens)
• Wrong fit hires for financial gain

It's our advantage that we've been able to start from the ground up to build out how we work, and there's no existing culture to 'rip up' - and it means we can offer a company share profit instead of a personal commission.

Which should encourage the first three bullet points above.

It's perhaps also to our advantage that we weren't recruiters previously - that we can look afresh at the industry, picking what's good and avoiding what's not so good.

Back to marketing, and if you're building out an incentive programme, consider the behaviours you'd like to avoid:

• Manipulating of data to influence a bonus-related outcome
• Squabbles with sales reps over attribution
• Creation of silos within the team
• Short-term thinking
• A lack of focus on long-term strategies

I've seen all of the above in my 20 years of marketing, and it's super hard to find incentives that always create the right behaviours as well as the right outcomes.

With the best of intentions, incentives can create the worst of behaviours without people even realising it.

And that's why I'd rather incentivise recruiters with a share of company profits, and have a conversation about contribution afterwards.