Two Things to Remember About Human Nature When Designing Incentives.

The 2016 Nobel Prize for Economic Sciences was awarded to Oliver Hart and Bengt Holmström for their work on incentives. We have discussed these in numerous blogs (for example, see [1-2]). Never use an incentive where the criterion is poorly linked to performance (e.g. profit in the case of investment advisors or hospital mortality rates in the case of service managers), and avoid incentivising less important things simply because they are measurable when this may distract still from more important but less tangible objectives (that is not SMART!). An inventory of incentives and how they are likely to play out should be part of every service development framework, since incentives do not consist only of payments and fines – just charging the service affects people in positive and negative ways. Incentives are covered under motivation in the COM-B model and they deserve lots of attention.

— Richard Lilford, CLAHRC WM Director

References:

1. Lilford RJ. Financial Incentives for Providers of Health Care: the Baggage Handler and the Intensive Care Physician. NIHR CLAHRC West Midlands News Blog. July 25 2014.
2. Lilford RJ. Improving Health Care from Outside Organisations. NIHR CLAHRC West Midlands News Blog. October 14 2016.