Wednesday, December 24, 2014

Tis the Season for Giving – The Pitfalls of Incentive Programs

It’s the holiday season in the United States, which is a time for giving gifts to others. Most of the time these gifts are for some sort of social or altruistic purpose, usually to friends and loved ones, but sometimes gifts are given to solve a problem. This happens a lot in organizations, where we call them “incentives”. We use them in an effort to alter the behavior of others. We entice someone to do something by giving them reason to expect some sort of reward for it. In the safety world, incentives are usually given to reward those behaviors that we identify as “safe”, such as wearing their personal protective equipment, reporting hazards or incidents, or, unfortunately, going a period of time without injuries.

The idea makes sense on its face, but incentive programs are often a lot more problematic than meets the eye. Based on our experience and understanding of the social science research, we have a few words of caution for any who are looking to implement such a program.

1. Trying to fix the wrong problem. As we said, often we add incentives to get employees to do the things we want them to do. This assumes that the problem is that the employee is not properly motivated to do what we want them to do, and if the problem is inside of the employee then the fix is to fix the employee by adding the incentive. Perhaps though the problem is that there are other contextual factors leading to the behavior, either in the physical environment, or in the organizational/cultural environment. Adding another incentive to counter other incentives may just be adding noise. Perhaps a better solution is to fix the context of the work. Or, perhaps the problem is with your understanding of how the work should be done, not with the employee.

2. Rewarding bad behavior. You always need to remember that incentives work at incentivizing people to get the incentive, whether or not they do what you want them to do is a separate question. The classic example is incentivizing injury reductions or lack of injuries. This works at lowering the numbers, but at least part of the reduction is because of hiding of injuries. So you want to avoid that. Carefully consider what you want to incentivize and think about all of the ways people can get the incentive. 

3. Incentives insensitive to context. Too many times incentives just fall into the Taylorism (LINK) trap of determining the one best method to do the job and assuming that this never changes. There are very few rules that apply in all cases. Get your employees involved in determining what you want to incentivize so that they can ensure that the thing you’re incentivizing is sensitive to the context they work in. We recommend you talk to your employees about the things you want to incentivize and ask them what their perspective is on why they aren’t doing what you expect of them. Make sure this is done in a “no fault” environment and is done in the spirit of learning, not teaching. You will then be in a better place to determine what the problems really are, which should then lead you to the solutions. 

4. Too much of an incentive. Social science research shows that if you are trying to alter behavior, sometimes a smaller incentive is better than a larger incentive. Sometimes intangibles are better than tangibles. Many people assume that you have to give them something of significant external value, when sometimes simple recognition by peers is enough. People are motivated by psychological needs, as well as external needs, and one of those needs is mastery. Another is relatedness. If you appeal to those needs you can sometimes get a more powerful response, while also appealing to people’s humanity. This builds trust and understanding more than external incentives tend to do.

5. Too much at once. If a program is trying to change too much at once it will be very hard to manage, meaning that there will be inconsistent application of the incentive, which will cause employees to lose trust in the program and become cynical. It needs to be consistently applied, so start small. If you start small that will also help you work out some of the bugs in the system early. 


We hope these at least give you food for thought with any incentive programs you have or are building. We also hope that you have a happy Christmas, Chanukah, Kwanza, Festivus, or holiday, and a Happy New Year!

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