You Have Three Incentive Tools. Are You Using All of Them?

Incentives can make or break your execution. Get them right and people bring their best. Get them wrong and a solid strategy can peter out quickly. All too often, leaders reach for the same lever every time—and miss the other two entirely.

The most common lever is financial. Bonuses, commissions, stock options. These work well for transactional or repetitive work, for creating short-term urgency, or for shifting focus to a new priority. When I was at Nike, we tied a portion of the annual bonus to digital sales growth. Suddenly, leaders who'd never paid much attention to the digital business were showing up to meetings, full of ideas. Some were genuinely useful. Others... let's just say the enthusiasm wasn't always matched by the expertise. But the point is, money moved them.

But financial incentives have limits. A review of 44 experiments on financial incentives found that cash rewards had almost no long-term impact on performance. They don't create lasting passion or engagement. Once the reward disappears, so does the urgency. And for work that requires creativity or long-term commitment, they can actually undermine the intrinsic motivation that was already there. Know when to use them—and when not to.

The second lever is social. People want to feel seen, valued, and connected to something bigger than their job description. Neuroscience research shows that receiving recognition activates the same reward centers in the brain as getting paid. At Nike, we had an internal tool called High Fives—a quick digital way to recognize a colleague's contribution. It took 30 seconds to send and meant a lot to receive. No budget required.

But social incentives go beyond a pat on the back. A study in The Review of Economic Studies found that employees work harder when they feel connected to their team—even without financial rewards. Simple things signal that contributions matter: recognizing team performance over individual metrics, putting people on high-visibility projects, calling out good work in meetings or team channels. Peer recognition especially punches above its weight. When it comes from a colleague rather than a manager, it often lands harder.

The third lever is the one leaders almost never think about: convenience. We like to believe people make rational decisions, but behavioral economics tells us otherwise. We take the path of least resistance far more often than we realize—choosing takeout over cooking, templates over custom work, the familiar route over a better one. The same dynamic plays out at work every day.

If executing your strategy requires jumping through hoops—multiple approvals, hard-to-find information, clunky processes—people will cut corners or skip steps entirely. It's not laziness. It's human nature. But flip it around and you have a powerful tool. Amazon's 1-Click ordering revolutionized online shopping by removing friction. The same logic applies inside your organization. If the process for flagging a problem to leadership is so cumbersome that people stop bothering, you get surprises instead. Problems that could have been caught early become crises. Make it easy to raise an issue and people will raise them. Make it hard and they'll stay silent.

Audit your workflows. Where are people forced to dig through emails or outdated spreadsheets to find basic information? Where are there approval layers that exist out of habit rather than necessity? Every unnecessary step you eliminate is an incentive in disguise.

Financial, social, convenience. The leaders who get the most out of their teams use all three, thoughtfully and intentionally.