Coin-Operated or Co-Determined?

Why Individual Incentives Might Be Doing More Harm Than Good

For over 25 years, I’ve worked on compensation systems—from traditional merit pay structures to complex incentive plans. What surprises me most isn’t how much things have changed, but how little they have. Despite everything we now know from behavioral economics and modern workplace dynamics, most mainstream thinking around cash incentives remains stuck in the past.

Take short-term incentive plans (STIPs). Compensation pros love to say they’re most effective when the incentive is tied to something the employee can directly control. Sure. That makes sense—on paper. But it’s time we question whether that theory holds up in today’s interconnected workplaces.

We’ve all heard cautionary tales like Wells Fargo, where runaway individual incentives led to fraud. But I’ve seen a quieter, more common outcome: individual incentive plans that mostly work... until they don’t. More often than not, they create short-term wins at the cost of long-term cohesion. Especially in sales and marketing, we continue to spend heavily on incentives without asking: Do these plans actually drive sustainable revenue? Or are they just eroding our margins?

We’ve Seen the TED Talk, Right?

Most of us know Dan Pink’s now-famous talk on motivation (and if you haven’t watched the RSA animated version, do). But his focus is on individual motivators. What’s missing is the corporate community context—the shared effort that actually drives today’s businesses forward.

The lone genius in a silo is a myth. Success today depends on coordination, not just contribution. So why are we still using incentive systems designed for individual performers?

The answer might be uncomfortably simple: because it helps companies manage pay more tightly. One-time bonuses are cheaper and less permanent than base pay increases. They feel good—a quick dopamine hit—but they don’t create lasting change. Some research suggests the psychological reward of a bonus wears off in three months or less. That’s not a system. That’s a sugar high.

What Are We Really Trying to Incentivize?

Here’s the big question: are we trying to drive individual performance or corporate performance?

One study cut right to the chase. Individual incentives showed no net productivity gains for the company. Zero. Group incentives, on the other hand, delivered a 0.7% productivity increase. Modest? Maybe. But measurable. And when both individual and group incentives were combined, the result was worse, not better. A classic case of dilution, not synergy.

Sure, group incentives come with risk. There’s less individual control. But in this case, the power of cooperation outweighed that risk. The takeaway? Mixed models often undercut their own goals.

If you want people to row together, don’t reward them for rowing alone.

From Corporate Math to Collective Magic

In my earlier career, I worked in a fast-paced, high-performance environment where incentives were stacked like a business school case study. The formula was simple: produce $X, earn $Y. Executives earned even more—because they were the ones “driving performance,” or so the story went. But let’s be real: that story has been hijacked. Today, the headlines are filled with billion-dollar CEOs and bloated private equity payouts, giving leadership a bad name. Most middle-market CEOs aren’t pocketing yachts—they're navigating real complexity with far less margin for error. But when the system rewards scale over substance, it’s no wonder people grow skeptical of corporate anything. The truth? We need more leaders who serve, not extract. More builders, fewer bidders.

That dissonance started to gnaw at me. Deep down, the whole setup felt too transactional—like we were optimizing people instead of engaging them. So when I joined New Belgium Brewing, a company of around 170 people with limited individual incentives, I’ll admit I thought they were nuts. No bonuses? No commission? No carrots on sticks? But what I found there changed everything.

Turns out, I was the one who had to unlearn.

New Belgium was thriving. They had a minority ESOP (Employee Stock Ownership Plan) at the time, a company-wide gainsharing plan, and strong performance across the board. In fact, during our peak years, we consistently outperformed many public companies in growth and profitability. The secret wasn’t individual heroics. It was collective energy. It was “we,” over “me.”

Later, I ran an internal study with our sales team to find out what really motivated them. The number one answer? The pride of calling themselves employee-owners. Not bonuses. Not commissions. Not cash. Ownership. Belonging. That feeling of building something together.

These weren’t coin-operated salespeople. They were purpose-powered humans.

Designing a Culture That Works

If you think incentives are your magic bullet, think again. They’re just one tool in a much larger ecosystem. Great cultures don’t just pay well—they’re designed well. Leaders need to create conditions where great work happens because of the system, not in spite of it.

It starts with hiring. If you’re only hiring for skillset and ignoring mindset, you might be unintentionally inviting coin-operated thinking into your company. Motivation fit matters. We all work for money—but we don’t all work just for money.

So here’s the lesson: be wary of individual incentives, especially if your goal is long-term value creation, not just quarterly performance.

They might work in growth-at-any-cost cultures or flip-and-sell startups. But for sustainable, integrated, mission-driven companies? The advantage belongs to the team. And the win goes to those who design for co-determination, not control.

If you’ve experienced the culture drag of outdated incentive systems—or found a better way—I’d love to hear about it. Drop a comment or share your story below.

(Updated from original post in 2019)