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Research / Academic Research in Action: Incentive Fatigue: Why Rewards Lose Steam – and How to Fix Them
by Allan Schweyer, Chief Academic Advisor, IRF
Incentive and recognition programs often start strong and then stall over time. Participation fades, performance lifts shrink, and the same rewards that once excited people begin to feel ordinary. That fade is incentive fatigue – the natural drop-off in motivation when incentives are too frequent, too predictable, opaque, or poorly matched to the work and the people doing it.
Fortunately, recent research points to practical ways to design programs that may keep their power longer and deliver measurable business results. In summary, the research recommends that designers acknowledge the following factors and address them accordingly:
Sales commission structures sometimes use escalating or “laddered” commissions based on achieving sales levels during a defined period; this type of reward may have broader application. Intriguing insights come from a 2025 study The motivating power of streaks: Increasing persistence is as easy as 1, 2, 3.
Evidence from this study suggests that streak-based designs can increase persistence and overcome fading motivation by deepening commitment to ongoing goals, with “streak incentives,” rewards that escalate for consecutive task completions.
The results of experiments demonstrate that these rewards consistently increase persistence more than larger, stable incentives. Unlike traditional rewards that assume higher per-task pay drives effort, streak incentives work by linking future rewards to past effort, strengthening employees’ commitment to maximizing earnings increasing their willingness to keep going.
The effect holds across contexts and incentive designs (gig-work scenarios, real task completion, CAPTCHAs), reward types, etc., even when streak incentives objectively pay less overall than flat incentives. The studies show that the benefit is not due to increasing payouts alone nor to simply highlighting existing streaks. Instead, it is the requirement of consecutiveness that drives motivation. Examples include sales support reps who could earn progressively higher bonuses (points, etc.) for making three or more consecutive calls without stopping, or delivery drivers for completing consecutive rides.
Actionable Insights
To apply and test these findings, reward designers might experiment with the following streak-based rewards in repetitive or persistence-heavy work.
A 2024 article in the Journal of Economic Behavior & Organization finds that game-based incentives (leaderboards, storylines, points) can boost effort under the right conditions. They might be most effective when traditional extrinsic rewards (like pay-for-performance) are weak or absent, and may be particularly helpful to motivate individuals who are otherwise disengaged. Note that in experiments where strong financial incentives were already in place, adding gaming features produced no extra benefit and even diluted motivation.
Designers should apply gaming elements selectively, using them as a complement where extrinsic rewards are modest or intrinsic motivation is low. Combine leaderboards (competition) and narratives/storylines (meaning) with tangible-value points but avoid superficial badges and avoid layering these rewards on top of already high-powered monetary incentives.
A 2024 study shows that reward frequency interacts with reward type: raising the frequency of cash rewards tends to help performance, but doing the same with tangible (non-cash/hedonic) rewards can dilute their impact.
The authors of the report argue that this is because frequent exposure to tangible rewards leads to satiation – their motivational impact plateaus – while frequent cash rewards continue to reinforce performance over time. The implication for reward designers is that cash might work best in high-frequency settings, while tangible rewards may be more effective when used sparingly for milestones, recognition, and memorable moments.
A large 2025 study of 25,000+ employees finds that recognition is the single strongest driver of employee engagement, followed by fairness, involvement, and transformational leadership. It also reveals that recognition and perceived fairness correlate strongly with engagement and lower burnout. In other words, if your incentives feel unfair or impersonal, fatigue arrives faster.
This also related to the reward programs themselves. If employees believe that incentives are confusing, arbitrary, biased, or impersonal, they disengage from the program quickly, even if the rewards themselves are valuable. By contrast, when recognition is transparent, grounded in fair and consistent rules, and linked to transformational leadership behaviors, employees not only engage more deeply with the program but also experience less burnout.
Though the research How Much Is Too Much? The Impact of Update Frequency on Crowdfunding Success is directed at communicating progress in crowdfunding, incentive communications are likely follow the same principle of “pacing your pings.”
The results of this study might remind incentive designers that rewards need the right communication rhythm to truly motivate – not too sparse, not too saturated. It demonstrates that the relationship between communication updates, and in this case crowdfunding success, follows an inverted U-shaped curve. Moderate updates improve campaign outcomes by signaling progress, building trust, and engaging backers. But once the frequency and length of updates exceed an optimal threshold, their effect turns negative, causing information overload that diminishes engagement and reduces campaign success.
Based on data from 2,852 projects on Israel’s Headstart platform, the study pinpoints turning points: around 19–22 updates and ~100 words per update maximize campaign success before effectiveness drops. Where an incentive program follows a campaign-style approach especially (a longer duration incentive program), designers should calibrate incentive program communication frequency and content for maximum impact.
This video is AI generated using IRF content.
This working paper review serves as a reminder to professionals involved in worker motivation that the use of variety and novelty in non-cash rewards is often critical to maintain the emotional excitement that accompanies non-cash rewards, especially compared to cash.
We explore two recent papers that address enhancing employee engagement and organizational outcomes, which offer recognition program designers specific and practical advice.
