Imagine two salespeople at the same company.
Johnson is a consummate professional. She’s an accomplished rep who is always ready to support her clients and colleagues. However, due to circumstances beyond her control—perhaps a major account goes bankrupt or her region hits a recession—she misses her quarterly target.
Smith, on the other hand, is lazy. He’s incompetent and never goes the extra mile. Yet, by pure luck, he hits his numbers. Maybe a massive order falls into his lap by chance, or his territory is experiencing an unrelated boom.
Which of them deserves recognition? To me, the answer is clear: it is fairer and more beneficial for the company’s future to reward the person who delivered the superior effort.
The “Luck” Bias
Most companies do the exact opposite. They give out recognition and rewards based on results alone, probably because results are easier to measure.
But there’s also something else going on: a systematic bias we chronically underestimate: the “luck factor.”
Daniel Kahneman is the only psychologist who’s been awarded a Nobel Prize. He won it in economics, since there is no Nobel Prize in psychology, for his work in identifying how humans make decisions and founding the field of behavioral economics.
One of his most intriguing findings is that we massively overestimate the effect of our own actions while ignoring the role of chance. When things go well, we take the credit—even if we mostly just got lucky.
It is demoralizing for high-effort employees to watch less competent, luckier colleagues walk away with the accolades and the checks.
The Problem with Bonuses
Some companies try to fix this with more complex bonus structures, but these rarely work. Experience shows that bonus schemes are either so simple they are unfair, or so complicated that no one understands them. Research even suggests that heavy reliance on these rewards can lead to poorer results and lower motivation.
The solution is simple: Leaders must focus more on rewarding effort than on raw results. We must recognize those who do an amazing job and, crucially, those who help others improve.
A Better Way
Next Jump, a New York-based company, provides a brilliant example. Their most prestigious award isn’t based on sales performance, but on who helped their colleagues the most.
In this video you can see their 2014 awards ceremony:
Shifting focus this way isn’t easy—results are easily measurable, while recognizing effort requires leaders to have a closer connection with their employees and deeper insight into daily work.
But there are three reasons why it’s worth the extra energy:
- Effort is not reliant on luck: While results can be a fluke, great effort is a product of talent and attitude. These are the traits that should be celebrated.
- Effort wins the long game: We shouldn’t just optimize for this month; we should be optimizing for the next many months.
- It prevents suboptimization: If I am only rewarded for my own sales, why would I ever help a teammate? Focusing on effort builds a culture of long-term health rather than short-term greed.
The Upshot
Leaders should acknowledge the work, not just the win. In the long run, this creates more fairness, higher motivation, and—ironically—better results.
Your Take
What is valued most in your workplace—results or effort? How does that approach affect your engagement and your team?
Leave a comment below—we’d love to hear your take.
