Incentives: Avoiding Entitlement with these 3 steps
Incentives are routinely used as a powerful behavior change tool in the workplace. By offering rewards for adopting desired behaviors, organizations can effectively motivate people to adopt important behavior. However, the use of incentives is not without its challenges, and it is crucial to understand the potential pitfalls and strategies to overcome them. Whistle behavioral sciences integrates insights from psychology with the laws of economics to provide effective, low-cost behavior change.
One of the concerns about using incentives to drive behavior change is that staff will become accustomed to rewards and the organization will be forever beholden to provide payouts. To prevent these expectations and ensure the long-term success of incentive-driven behavior change, Whistle utilizes a three-phase strategy.
First, it is helpful to offer a larger initial incentive to overcome the “status-quo momentum” required to adopt a new behavior. This larger reward is offered for the first action by an employee. For example, the first time someone uses a new software application, they earn this reward. This approach provides the necessary push to get people started, overcoming the excuses and reluctance.
Second, during the first 30-60 days of the behavior change process, it is crucial to establish clear “do this, get that” incentives. This approach creates a strong link between the desired behavior and the reward, making it easier for individuals to understand what is expected of them and what they will receive in return. By maintaining this clear connection during the initial phase, people are more likely to develop a habit and continue the behavior. Critical aspects of this phase include immediate rewards for the behavior and frequent communications.
Third, after the initial period, it is important to transition to intermittent recognitions rather than continuous rewards. This strategy helps maintain motivation and reinforces the desired behavior without creating an overreliance on external incentives. By providing occasional acknowledgments of progress and success, individuals are more likely to internalize the benefits of the behavior change and continue engaging in it.
Loss aversion can be used to further enhance the effectiveness of incentive-driven behavior change after the initial habituation. Loss aversion, as described by Kahneman and Tversky (1979), refers to the tendency for people to prefer avoiding losses to acquiring equivalent gains. This means that the pain of losing is psychologically more powerful than the pleasure of winning. One effective method is the use of a regret lottery, where random participants are selected as lottery winners, but only receive the reward if they have already completed the assigned tasks. The fear of missing out motivates individuals to continue engaging in the positive behavior even after the initial incentive period has ended.
The use of incentives to drive behavior change can be a highly effective approach when implemented correctly. By understanding the potential challenges and employing strategies to overcome them, organizations can create lasting, positive changes. Through a combination of larger initial incentives, clear “do this, get that” structures during the first 30-60 days, the use of loss aversion techniques like regret lotteries, and intermittent recognitions thereafter, incentive-driven behavior change can be a powerful tool while still being cost efficient.
References
- Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-292.
