When reward systems measure the wrong thing: a behavioural perspective

Reward is not the point. Behaviour is. 

Reward is often framed as recognition, fairness or incentive. But its real purpose is more direct – to shape behaviour. Many reward practices begin with structures and market comparisons, then work backwards to justify them.  

At a recent PARC event, Professor Rob Briner (Queen Mary University of London) suggested a more effective starting point. What behaviours does the organisation want to encourage, and does the reward system support those behaviours? 

The session drew on evidence from organisational psychology and discussion among Reward Leaders about how behaviour is interpreted, measured and reinforced in practice. 

Answering this question matters because organisations continue to confuse performance with outcomes. Targets are hit or missed, bonuses are paid or withheld, league tables are produced. But outcomes are an unreliable guide to contribution. A salesperson may fail because they were given poor leads. A team may miss deadlines because client demands kept shifting. A manager may fall short because the department is understaffed. In each case, the result is real, but it says little about what the individual actually did to produce it. 

This is where reward goes wrong. When tied too closely to outcomes that people do not fully control, it fails to reinforce the behaviours the organisation values. Worse, it can reward luck, punish effort and create the appearance of rigour where there is mostly noise. 

Performance, therefore, cannot be only about task completion or target delivery. It must include the wider context in which work gets done; helping colleagues, showing judgement, adapting to change and contributing to an environment in which others can perform well. These behaviours are essential but harder to capture in formal systems. They are also easy to distort. Once discretionary effort is too explicitly measured or rewarded, it risks becoming another obligation, stripped of the spontaneity that made it valuable in the first place. 

This connects to a broader shift in the boundary between reward and entitlement. Benefits once seen as differentiators may now be treated as baseline expectations. Flexible working is a clear example. Whilst private medical cover, career development and time off may be viewed by some as rewards, by others as standard. That does not make them unimportant. But it does make the language of reward more unstable than it first appears. 

Any conversation about reward, then, must resist simple formulas. Financial reward can motivate, but not always. Non-financial reward can matter greatly, but only in the right context. Recognition can reinforce behaviour, but only when it is specific, timely and credible. Much depends on individual line managers, whose day-to-day interactions often shape the lived experience of reward more than any formal framework. 

The lesson for reward leaders is not that reward does not matter. It is that reward is often asked to do too much while being understood too narrowly. The important question is not simply what people are paid, or even what they receive beyond pay. It is what the organisation is signalling, reinforcing and normalising through those choices. 

Reward, in other words, is not an end in itself. It is a behavioural tool. The question for leaders is not simply what is paid out, but what is reinforced.  If organisations are unclear about the behaviours they want, no amount of reward design will make up the difference. 

Key Takeaways: 

• There is no single formula for motivation or reward. Difference people have different things, effective reward design requires judgement, evidence and a clear link to the behaviours being enforced.
• Performance is not the same as outcomes. Outcomes are shaped by context just as much as effort, so tying reward too closely to results can lead to rewarding luck, punishing effort and sending the wrong signals to the team.
• Reward is a behavioural tool. Reward systems should start with clarity about the behaviours the organisation wants to encourage, rather than defaulting to structures, benchmarking or market norms.
• Good performance goes beyond targets. Behaviours such as helping colleagues, showing good judgement and contributing within the wider work environment are critical, though difficult to measure and easy to distort if over-formalised.

If reward is ultimately a behavioural tool, the next question is what science tells us about why people behave as they do – a theme we will explore further in our September session on the Science of Human Motivation.