How Incentives Can Undermine Your Influence

By Joseph Grenny

I've studied the influence strategies of many leaders in the past 25 years but few more remarkable than Danny Meyer's.

Danny is, in my estimation, the most influential restaurateur in New York City. In 1985, he started the Union Square Café with a disarmingly delicious American menu. And in spite of the fierce competition for Manhattan diners, he succeeded phenomenally in both culinary and financial terms. For his next feat, he opened Gramercy Tavern, where he struck gold again. In the past 11 years, Gramercy Tavern and Union Square Café have ranked among Zagat's top 10 most popular restaurants in New York City. In 2004, after following with French, Indian, and Italian restaurants, Danny opened the renowned Shake Shack in Madison Park. Since then, six locations have followed. Today every one of his 10 restaurant brands have appeared every year in Zagat's top 40 for New York City. I wanted to find out why.

When I asked Danny to explain his sustained success, he told me a story. The week before, a guest at Tabla, his Indian restaurant, was settling his bill and asked his server if he could recommend a place to find a great cigar. The server said, "I'm sorry, I can't. But I know someone who can." He hustled across the restaurant and motioned to one of the other servers, who had just returned from Puerto Rico with a personal stash of exotic cigars. Moments later that server not only presented the guest with one of his prizes but also took time to rhapsodize about its provenance and specifications in loving detail.

After relating this incident, Danny went on to explain that his goal is to influence his 1,500 employees to achieve that same level of customer service daily. "We serve 100,000 meals every day," Danny told me. "What would happen to our growth opportunity if we could just make 5 percent of those experiences supremely and intimately special? Serving great food is what's expected of us. Our opportunity to become people's favorite restaurant lies in going beyond meal service to creating an experience of true hospitality."

As a student of influence, I wanted to know more about how Danny so predictably and repeatedly succeeds at engaging his remarkable staff in creating these kinds of experiences for their customers. I prodded Danny about his brilliant strategies in each of the six sources of influence: motivation, training and skill building, positive peer pressure, the influence of managers and coaches, incentives, and tapping into the power of physical space and environment. For five of those sources, Danny's strategies were masterfully planned and on point. When I asked about his use of incentives, however, his response couldn't have been more stark.

"Well, we don't really do much with incentives."

"Really?" I asked. "You don't do something to reward those who give away their own prized cigars?"

He furrowed his brow, then said politely, "No. Not really."

While Danny's response was startling, it is also extremely telling about his innate understanding of influence.

Over the years, I've seen leaders incorrectly use incentives time and again in an attempt to influence others. They figure it's the quickest and easiest route to change others' behavior, so they throw incentives out like candy. In fact, those who really understand influence—who truly understand how to shape a powerful and effective organizational culture—tend to think of incentives last rather than first (or if you're Danny Meyer, not at all). What's more, these brilliant influencers' expectations of the effects of those incentives are usually modest. One leader told me: "I just try to be sure incentives don't undermine what we're trying to do." Turns out, Danny Meyer not only agrees, but he also has enough influence acumen to dismiss incentives almost altogether.