What do Wells Fargo, a UK heat program, and Israeli daycares have in common?

Think of the last time a policy, quota, or incentive in your organization produced an outcome nobody intended. What was the reward actually attached to?

What do Wells Fargo, a UK heat program, and Israeli daycares have in common?

Three institutions. Three industries. Three eras. Each one built a system to change behavior. Each one got exactly what it rewarded.

None of them got what they wanted.

In Haifa, Israel, a group of daycare centers was struggling with late pickups. Parents were routinely arriving after closing time, forcing teachers to stay. The centers introduced a fine — ten shekels per child for any pickup more than ten minutes late. Simple deterrence. The fine would make lateness costly, so parents would be less late.

The opposite happened. Late pickups nearly doubled. When the fine was eventually removed, the tardiness remained. And the centers never returned to baseline.

In Northern Ireland, the government launched a program to encourage businesses to switch from fossil fuels to renewable heat. The design was simple: pay businesses for every unit of biomass heat which they used. What the designers missed was that the subsidy provided exceeded the cost of the fuel. Businesses discovered they could earn more than they spent by running boilers continuously — in empty buildings, through the night, whether anyone needed the heat or not. In media and parliamentary coverage of the scandal, the behavior the program produced acquired its own name: the more you burn, the more you earn. The program had committed the government to more than £1 billion in future payments. When the scale of that exposure became public, the government fell.

At Wells Fargo, management wanted growth. They built a system of aggressive sales targets, relentless daily pressure, and financial rewards for hitting the numbers. Bankers opened more than two million accounts without customer authorization. They hit their targets. And customers had accounts opened in their names without their knowledge or consent.

A fine. A subsidy. A financial reward. Three different tools, three different industries, three different eras. The same underlying logic.

In each case, someone designed a system to produce one outcome. The system worked perfectly. It just produced a different one.

The Haifa daycare centers wanted fewer late pickups. The Northern Ireland government wanted less fossil fuel use. Wells Fargo wanted more accounts. What each system rewarded is what each system got.

That’s the thesis of this publication. Behavior follows rewards.

Not intentions. Not mission statements. Not what leadership says it wants. What the system pays for is what the system gets.

The rewards are not always monetary — as you will see soon.

Why I’m writing this

I have invested more than 30 years in enterprise growth. My role, in one form or another, was often the same: figure out what an organization actually needed to win, and build the conditions to make it happen. That meant understanding incentives — not just compensation, but everything that shaped how people decided what to do next, noting where resources were allocated, and how priorities were acted upon.

What I observed, across industries and ownerships, were gaps. Organizations would declare a strategy, build a plan, sometimes even communicate it clearly — and then have incentive systems that rewarded something different. The strategy said one thing and the rewards said another. Behavior followed the rewards.

This pattern is seen in corporations, communities, sports, government — it is prevalent throughout our lives. When Facebook’s algorithm rewarded engagement above all else, it got content engineered for outrage — because outrage drives clicks. When Major League Baseball rewarded home run production through the 1990s and early 2000s, players responded accordingly. The numbers went up. So did something else.

The mechanics are the same whether the scoreboard is a quarterly report, a box score, or a Nielsen rating. The consequences differ, yet the pattern does not.

This publication is an attempt to document that pattern rigorously — sharing cases, research, and the mechanics of how incentive design actually works. The cases range from a language app that rewarded the habit over the fluency, to an Olympic tournament where the rational play — the mathematically correct move — was to lose the match. The research runs from behavioral economics to agency theory to the organizational failures that made fraud not just possible but predictable.

The book — Behavior Follows Rewards — is being written in parallel. What you’ll read here is adjacent to the book but distinct from it. Some of it will go deeper. Some of it will be current. None of it will be padded. We will cover the successful incentive designs, and the less fortunate ones.

Posts will go out every week or so. Everything here is free to read.

If you want to understand why human and organizational performance so reliably diverges from intent — in business, in sport, in government, in any institution where people are measured and rewarded — you will want to check in here each week.

If you’re working through an incentive design challenge in your organization — or trying to understand why a strategy that looked right on paper isn’t producing the results you expected — I work with leadership teams on exactly these problems. You can reach me at wayne@waynerepich.com.

Behavior Follows Rewards. The pattern shows up wherever people are measured and rewarded.

Subscribe for free. Share it with someone who needs to read it.

—Wayne

Next week: Duolingo. They built one of the most engaging apps on the planet on a single insight: reward the behavior you want. The question is what happened when they applied that logic to their own people.

In development — upcoming cases include: corporate incentive design · government program failures · sports governance · military strategy · and more from across industries and eras.

Sources

Gneezy, U., & Rustichini, A. “A Fine Is a Price.” Journal of Legal Studies, 29(1), 1–17. 2000.

Report of the Public Inquiry into the Non-Domestic Renewable Heat Incentive Scheme (RHI Inquiry Report). Sir Patrick Coghlin (Chair). January 13, 2020.

CFPB Consent Order, In the Matter of Wells Fargo Bank, N.A., File No. 2016-CFPB-0015. Consumer Financial Protection Bureau, September 8, 2016.