The Power of Incentives

a carrot in the sky, like a bait

“Call it what you will, incentives get people to work harder.”  –Nikita Khrushchev

Economists sum up the effectiveness of rewards in four simple words: People respond to incentives. Humans are motivated by incentives, and your employees are humans. They are humans, right?

For incentives to work best, they should be measurable, understandable and within the employee’s control. Moreover, the reward should be closely linked in time to the achievement.

Keys to setting up good incentive programs. Make sure they are:

  1. Measurable
  2. Understandable
  3. Controllable (by the employee)
  4. Closely linked in time to the achievement

Here’s another tip: “If you would persuade, appeal to interest, and not to reason.”  Ben Franklin, Poor Richard’s Almanack.

Too often, we try to give our sales people and other employees the reasons why they should do something – why they should build a certain display or place a certain product. Giving reasons can be helpful, but as Ben says, appeal to interest and you’ll get attention and engagement.

As an example, the reason an employee should build a certain display or place a certain product is because it helps the company achieve its goals and keeps the supplier happy. However, what’s important to the employee is what’s in it for him – what’s in his best interest. Demonstrate to the employee how building the display or placing the product will increase their commissions, chances at winning an incentive, or getting recognition at the sales meeting.

Last but not least, a big motivator of human behavior is the intrinsic interest we have for solving problems. Think crossword puzzles, Sudoko, and video games. Employees may not recognize or ever admit it, but they love to solve problems. Arouse your employee’s curiosity with an incentive, and then challenge them with a problem that needs to be solved at a customer’s store. You might unleash their inner problem solver, and create a happy customer in the process. Just keep them away from the Clash of Clans, that is addictive.

Managing and guiding your employee is an important component along with the incentives. Teach them in small steps, oversee the process, and give them plenty of support and praise. The incentive alone won’t be the sole remedy to get the effort. You need to be there to coach them. What works best is gradually shaping behavior over time by giving feedback and providing positive rewards.


  • Incentives work, but they work best when they are measurable, understandable and within the control of your employee.
  • The incentive should reward the right behaviors – customer service, effort and perseverance.
  • The reward alone won’t get the job done. You need to be there with your employee to coach them and cheer them on.

When done correctly, incentives work. Use them in your beer distributorship to drive sales, increase margins and improve the bottom line. Ben Franklin would be proud.