by Kerry Patterson | March 31, 2011

Sometimes, well-intended acts lead to unintended consequences. You thought you were doing the right thing—even a nice thing—but, somehow, it blows up in your face. This is often the case with incentives, with which we should all take a warning from Clare Boothe Luce, who once opined, “No good deed goes unpunished.”

Consider a typical employee-of-the-year program. Hundreds of individuals show up to honor an individual who has made long-term and significant contributions to the company. It’s a nice dinner, the speech goes well, the big boss hands out a half-dozen additional awards, and everyone leaves with smiles.

But, in fact, according to a long line of research into such corporate affairs, when you ask people anonymously how they feel about the event, they reveal that they’re quietly angry. They figure that they’re more deserving than the recipient. And they feel even stronger about the employee-of-the-month award. They know for certain that they’re more deserving than the 12 people who got picked last year and think, “It’s all politics, that’s what it is.”

On another note, I once submitted the name of an employee who worked for me for a company award. He was humiliated when he found out he had won. He sincerely believed the award was for kiss-ups and wanted nothing to do with it. He stared at the floor during the ceremony and never forgave me.

You get the idea. The complex act of drawing attention to an individual’s performance can have a chilling rather than motivating effect. But it doesn’t have to be that way, not if you put some thought into it. Here are a few guidelines.

Use incentives in moderation. Pay, commissions, and bonuses should carry the lion’s share of rewarding daily activity. Incentives should be used in moderation and to modestly reward noteworthy, but not necessarily record-breaking, performance. Make frequent use of rewards and keep them simple and inexpensive. When rewards carry a large dollar value, they can engender unhealthy competition, jealousy, and anger.

Put thought into the rewards. The minute you mechanize your rewards, they start to lose the “thoughtful” quality associated with a handpicked gift or a personally written note. At the corporate level, it may make sense to purchase trophies or plaques in quantity, but at the work-group level, a handpicked gift suggests that you put some thought into the reward. Your personal attention in selecting the reward can be as valuable as the reward itself.

Choose rewards that reward. We’ve all been given candy when we’re on strict diets or sporting event tickets to a sport we don’t care for. While we may appreciate the figurative pat on the back, the gift still goes unused. Find out what the recipient values before you place your catalogue order or walk out of a gift shop with a cool trinket. What you think is cool may not be what the person you want to honor enjoys.

If you don’t know the recipient’s personal tastes and interests, ask the person’s friends and coworkers.

Determine if actions lead to results before rewarding them. One group of well-intended software company executives decided to eliminate bugs in their code by paying code writers five dollars for every mistake they found and fixed. The number of bugs increased right along with the amount of money they were now paying people to do their jobs.

Why was that? Because the reward stimulated the wrong behavior—creating bugs. The more bugs code writers created, the more they could fix, and the more they fixed, the more money they took home at the end of the pay period. If the company rewarded anything, it should have been for writing bug-free programs in the first place, not for fixing bugs.

In a similar vein, I once consulted with a firm that was about to celebrate the greatest number of products ever produced by a production team in an eight-hour shift. Breaking the long-standing record was a big deal, and the bosses were about to reward the Herculean effort with a big and expensive party. Not knowing what had taken place, I asked what the team had done to break the long-standing record. Nobody was quite sure, so they checked into the matter—more out of curiosity than anything.

It turns out that in order to set the record, the production team had violated quality standards, threw safety procedures out the window, didn’t do routine maintenance, and left the other shift with no stock or in-line product. In short, they had done things that should have been punished, not rewarded.

So check to see that the reward is deserved. Make sure the reward celebrates and engenders positive, not negative, performance.

Ask, “What might happen?” All of these suggestions have one element in common. They remind us that when it comes to incentives, we shouldn’t rely on our intentions as a predictor of the results our efforts will yield.

In fact, the more excited we are to reward positive performance, the more likely we are to be at risk. We observe something we admire; we sincerely want to reward others for what they just did, so we give them a special incentive. Unfortunately, we often jump from admiring the performance to selecting the reward without asking ourselves, “How might this particular incentive go awry?”

So stop, think about what you’re doing along with the results it’ll achieve, ask others for their opinion, and then only after you’ve carefully thought it through, select your incentive. Take care to ensure that your good intentions translate into good feelings and actions. After all, good deeds (even yours) should be rewarded, not punished.

Kerry Patterson is coauthor of three New York Times bestselling books: Crucial Conversations, Crucial Confrontations, and Influencer. His fourth book, Change Anything, is scheduled for release in April 2011. He is the cofounder of VitalSmarts, as well as a sought-after speaker and consultant to the Fortune 500. He and his coauthors blog regularly at