Why did your transformation fail? The often overlooked or underestimated aspect of an Agile transformation, incentives. The goal of transformation is to change behaviors. Without understanding the incentives in place and how they are driving behaviors, it’s difficult if not impossible to truly transform! Many organizations have incentives in place that they don’t even identify as incentives. For example, roles that carry prestige incentivize people to aspire to the role for the prestige alone. What types of people will end up filling that role? What behaviors are rewarded to get there? Role-based yearly competency assessments are another incentive that drives behavior. What behaviors will you exhibit if your new role is “Scrum Master” but your yearly assessment is based on the role description of Systems Business Analyst? We have all seen Dan Pink’s talk about motivating knowledge workers. When we discuss incentives, we are usually talking about extrinsic motivators that are in place. Harvard Business Review published an article titled, “Why Incentive Plans Cannot Work” and specifically talks about how extrinsic incentives only create a temporary behavior change. So the real question is, how can we change our incentives from extrinsic to intrinsic and align them at all levels of the transformation?

As leaders, we need to be aware of this factor and begin uncovering and tackling it early. Misaligned incentives or incentives driving behavior away from agility often show themselves as other symptoms. Questions we should be asking:

What incentives are in place at each level? (Teams, managers, senior leaders, etc.)
What roles does HR have in place for assessing people’s competency?
How are our incentive structures enabling or inhibiting our agility?
How can we align incentives at all levels?
Which incentives should we drive toward if we want the transformation to sustain?