In "On the Folly of Rewarding A, While Hoping for B," Steven Kerr demonstrates that organizations systematically make the mistake of rewarding behaviors that run contrary to their stated objectives. His thesis rests on a fundamental principle: individuals seek to identify what is actually rewarded, then strive to accomplish those activities, often to the near-total exclusion of what is not rewarded.
Kerr illustrates this pattern across multiple domains. In politics, voters reward candidates who speak in vague official objectives and punish those who propose concrete but controversial operational objectives. In a military context, he contrasts the Vietnam War -- where soldiers returned home after a fixed duration, regardless of outcome, completely misaligning their incentives -- with World War II, where return depended on victory, aligning individual and organizational objectives.
In medicine, he shows that physicians favor false positives (diagnosing a healthy patient as sick) over false negatives (missing an illness), because the system punishes missed diagnoses far more severely than unnecessary treatments. In universities, institutions claim to value teaching but reward only published research for tenure decisions. In orphanages, the goal is to place children in good homes, but bureaucratic rules make adoption nearly impossible. In business, organizations say they want long-term growth, teamwork, and innovation, but reward quarterly profits, individual performance, and conformity.
Kerr identifies four root causes of this chronic misalignment. First, the fascination with "objective," measurable criteria pushes organizations to ignore important but hard-to-quantify goals. Second, the overemphasis on highly visible behaviors (publishing papers, scoring points) overshadows less observable but equally crucial contributions (teaching, building team spirit). Third, organizational hypocrisy: some organizations are dishonest about their true objectives. Fourth, emphasis on morality or fairness rather than efficiency leads to reward systems based on what "should" be valued rather than on what would actually produce the desired results.
Republished in 1995 with an update, the article confirms the persistence of these patterns twenty years later. This foundational text remains one of the most cited articles in organizational behavior and retains its full relevance for anyone designing incentive systems -- including in the current context of AI-driven transformation.