In every single Scooby-Doo episode, eventually there comes a moment when Scooby and Shaggy refuse adamantly to serve as “monster-bait” but are then persuaded to follow the plan in exchange for a “Scooby snack.” Every year, usually around this time, almost every advisory firm gives out its own version of Scooby snacks—the annual bonuses. These are expensive—they consume as much as 7% of a firm’s total revenues. That makes them the second-largest expense behind salaries, and they exceed technology and rent expenses combined.

Given how expensive bonuses are, I can’t help but wonder if they work. If Scooby snacks can get Shaggy to walk into the cave whistling, do they have the same impact on the performance or behavior of employees?

I will jump right to the conclusion: In my experience, incentive compensation (bonuses) have very little impact on the long-term behavior of people. Bonuses will not get someone to consistently do something they are reluctant to do. What’s more, over the long term bonuses will not only not increase the amount of effort a person puts into an undesirable task but may actually cause the person to develop a resentment toward it and frustration with the entire organization.

It is very much my belief that:

1. Bonuses, by themselves and on their own, do nothing to change the long-term behavior of the professionals.

2. Bonuses are very good at rewarding and perhaps reinforcing behavior that already occurs. That in itself is a very good and legitimate use of incentive compensation.

3. Bonuses can upset a lot of people in a lot of different ways. At times, the amount may not meet the employee’s expectations. At times, the employee’s bonus is less than it was the year before. At times, the formula for bonuses may fly in the face of the stated culture. At times, “who got what” may be different from the perception of merit. There are so many ways in which Scooby snacks can lead to growling.

If you want Shaggy to go into the cave right now, you can pay him for it, but if you want to turn Shaggy into a brave cave explorer, you have to put down the Scooby snacks and try something else.

There are many examples showing that bonuses don’t change long-term behavior, and I will start with an example from my own experience. I remember a large and well-known client firm I worked with—which employed a group of 15 advisors. The firm paid each of them a salary, and those salaries ranked easily in the top 25% of the industry. The leadership of the firm, however, was dissatisfied with the team’s business development (sales) efforts. Of the 15, only one was consistently bringing new clients to the firm. Two others had some success, but it was inconsistent. The rest simply did not contribute to bringing new clients in—they just didn’t. The CEO very much believed that this could be fixed with a new bonus plan—thinking that if the firm paid a lot for business development then this would motivate everyone to do more of it.

The plan was implemented, and two years later I had a chance to speak with the CEO about its effectiveness. The results were, well, judge for yourself:

The advisor who was good at bringing in new clients continued to be good at it, and now was also making a lot more money for it. The two advisors who were OK on the business development front continued to be OK and were quite happy with the plan. The dozen advisors who were not bringing new clients to the firm before were still not bringing new clients to the firm—yet they had become quite angry.

If leaders want to change employees’ behavior, particularly to make big changes, they usually require multiple tools. Let’s call them “levers.” Using only the monetary lever is not only ineffective but can be counterproductive. There are at least two others that should be used to create changes—the levers of culture and management.

Before we explore them, however, I would really like to throw at least a couple more rocks at the notion that incentives can change behavior in the long term. I was a smoker for almost 20 years (I started at 15—not exaggerating). Quitting smoking is very problematic for smokers. Mark Twain reputedly joked that “quitting smoking is the easiest thing in the world—I have done it thousands of times!”

The thing is, most smokers want to quit. There is no dispute or argument even among smokers that puffing a cigarette is bad. Surveys suggest that 70% of smokers at any given point in time want to quit, but only 2% to 3% succeed in any given year. Clearly, this is a very big behavioral change and it goes into the territory of addiction, dependence, the biochemistry of the body and the neurochemistry of the brain. Still, perhaps so do a lot of other changes we want to see in an organization.

In 2005, researchers from the University of Pennsylvania teamed up with GE to offer financial incentives to GE employees who quit smoking. The results were remarkable. The researchers enlisted 1,900 volunteers and paid them up to $750 in incentives structured over the course of a year for the completion of abstinence milestones.

The results were very telling. First of all, the incentives improved the “quit rate” by three times! The money made smokers three times more likely to quit! But this still means that only 15% of smokers actually quit. For 85% of the participants, money made no difference at all!

What’s more, in a similar program in Switzerland the researchers achieved similar results—i.e., increased success with rewards—but they also noted that all the effects of the program were lost once the incentives ran out. The more abstinent paid non-smokers quickly lit one as soon as the money stopped coming.

And this is another lesson about Scooby snacks—if you are going to use them, you better not run out!

Another great example comes from the excellent book Drive by Daniel Pink. In the book, Pink describes an experiment from the 1940s. In it, researchers were preparing to test the problem-solving abilities of rhesus monkeys and placed puzzles in their cages. What they found was that the monkeys immediately took interest in the puzzles and started trying to solve them. Within two weeks, the monkeys were puzzle-solving champions.

The researchers then tried “paying” the monkeys to solve the same puzzles and, astonishingly, the monkeys became worse at the puzzles, made more errors and started to have less interest in them. Psychologist Harry Harlow, Pink notes, had recognized “intrinsic motivation,” the fulfilment of the task itself, as something that trumped the materialistic payment.

Culture is Stronger Than Money

Then Harlow abandoned this research on intrinsic motivation because it did not pay well. … (Just joking!) We can only speculate why, but Pink perhaps gives us a clue. He writes that Harlow left “rather than battle the establishment.”

This is the key for me. We all tend to do the things that the culture in which we exist tells us are the right things to do. We tend to comply with culture, and this provides us with a very powerful motivation for change.

I quit smoking about 12 years ago, not because I was paid to quit but simply because the culture changed. It became increasingly socially unacceptable to smoke. More and more of the people around me were quitting smoking. More and more places were “non-smoking.” Most important, more and more colleagues and clients would react with open disapproval when they noted I am a smoker. I was willing to risk the cancer but not constant social disapproval. I would propose the same is true for most people in most organizations.

One of the most powerful behaviors for change is the social pressure. Most people, most of the time, tend to do what the culture around them expects them to do. The reason 12 out of 15 advisors will not develop new business is primarily because the culture of that organization tells them it is “OK” to not develop new business.

I observe the same in the small boxing gym I own and go to in Seattle. Fitness classes are a group activity where you work with a number of partners on a number of exercises. The class is one hour long and quite intense. At the end, you can tell it is hard because everyone’s shirt is dark and dripping with sweat. Recently, we had to cancel one, yet quite a few people still showed up. The vast majority of them elected to simply remain at the gym and just work out on their own.

Here is the thing—at the end of the “self-directed” class, most people had left early. I took no scientific measures, but less than a third of the class actually exercised for an hour. What’s more, even among those who stayed you could tell that they had not exercised nearly as hard as they would in a class. The shirts were not dark with sweat.

We are all perhaps not very good at motivating ourselves, but we are all motivated by the expectations of others. The approval of our peers means much more than the Scooby snack. If you have 12 advisors who do what you want them to do and three advisors who don’t, there is a lot of pressure on the three to comply. If you have only three who comply and 12 who don’t, you have no chance.

Perhaps an idea here is to form teams or groups so you can team up the three performing advisors in a team with another two or three who show promise and separate them away from the others who likely will not change their behavior.

Management Matters

Finally, “management” can achieve a lot. Perhaps an even better word is “accountability”—the notion that someone is observing and noting your behavior. In fact, it is a well-known phenomenon in a gym that everyone does more push-ups when someone else is counting. That is quite important—it almost does not matter who is counting. In the gym, the “counter” is more or less a stranger you will likely never see again. This person has no ability to reward or punish you. Still, chances are you will do at least two or three more because of that accountability factor. This is a big reason personal trainers and even consultants are effective—the accountability to another person.

Rather than creating incentives, most firms will be much better off if they simply set goals and create an accountability mechanism for tracking them. Yet so many firms are very reluctant to do that. Many fear that somehow the goals will be poorly received or that the managers who are charged with accountability will be seen as the “bad guys.” So instead they choose the passive-aggressive and largely ineffective approach of using Scooby snacks.

Management can go well beyond just accountability. Management can also mean training people and patiently developing their skills. In the case of the ever-difficult business development, this can mean persistent mentoring, encouragement and training. The management of a firm can be effective by helping professionals understand how to approach business development and by surrounding them with resources.

After all, even in the smoking cessation programs that GE paid for, the participants were not just given a check but were asked to enroll in coaching and educational programs that helped them achieve the goal they were paid for.

What To Do With The Snacks?

In my own experience, spending money to change behavior is an ineffective strategy. The money can and should be spent rewarding success or sharing success rather than sending wishful messages through complex bonus programs. I very much believe that most of the time we do what we believe is right, what we believe those around us expect from us, what we were told to do. Unfortunately, we also tend to do what we have always done.

To change what someone “always does” is very difficult, and we need to find a number of levers to move that giant rock. Culture and management to me are much more promising than money, but perhaps if we combine all three then we really have something!

Philip Palaveev is the CEO of the Ensemble Practice LLC. He’s an industry consultant, author of the books G2: Building the Next Generation and The Ensemble Practice and the lead faculty member for the G2 Institute.