Motivating employees takes more than carrots and sticks—it hangs on making them aware of those incentives and deterrents, according to new research.
Companies, governments, and institutions across the globe spend countless billions on incentive programs in hopes of motivating employees to do everything from working out at the gym to turning off the lights at home. Yet, despite the brainpower devoted to devising creative rewards and fine-tuning offerings, employees don’t always buy in.
All this money and time and smart people thinking about programs is all for naught if we don’t effectively communicate them.
The reason might be as simple as employees not knowing about the incentive programs. Leslie John, professor of business administration at Harvard Business School, and a team of researchers found that a major factor holding back incentive programs, whether a wellness program or a retirement savings plan, may be a lack of effective advertising.
“All this money and time and smart people thinking about programs is all for naught if we don’t effectively communicate them,” John says.
In particular, companies are failing to make the incentives conspicuous enough to make employees notice and take action, according to the research, published September in Organizational Behavior and Human Decision Processes.
The study could provide an incentive of its own for businesses looking to attract and retain talent amid a brisk labor market and pandemic-induced burnout. Well-run workplace benefit programs reward workers without boosting salaries and help employees bring their best selves to work, a win-win for businesses.
John cowrote the paper with Hayley Blunden, assistant professor at American University’s Kogod School of Business; Katherine Milkman, professor at University of Pennsylvania’s Wharton School; Luca Foschini, co-founder of Evidation Health; and Bradford Tuckfield, Kmbara founder.
Not just what you say, but how you say it
You don’t have to look hard to find examples of thoughtfully-designed incentives that failed to move the needle. Companies lay out tens of billions of dollars on wellness programs each year, underwriting gym memberships and offering other perks, yet analyses find only a third or so of employees at US companies take advantage of these programs.
Over half of American workers don’t sign up for retirement plans, including many whose employers offer these benefits. Even getting consumers with some of the highest electric bills in the country to turn off the lights can be challenge, as California found out with a failed discount program.
Why some incentives spur action while others don’t has been puzzling companies and economists alike.
Testing whether better marketing yields results
John and her fellow researchers proposed that the problem may not be the incentives themselves, but how they are presented. In particular, failing to promote incentives effectively could lead to fewer people taking advantage of them.
The research team tested their idea through a 2015 field experiment that involved 2,500 participants in a walking program offered by the Evidation health tracking platform. The program paid the walkers small amounts of money based on their total steps.
We have to make [an incentive] really salient to employees so they actually use it.
Researchers divided the walkers into two groups and paid participants up to $40 for every 200,000 steps. The study tracked participants’ daily steps for about two months.
One group received an email the day before the program started that outlined the incentives. The email, “New Program to Encourage You to Walk (earn Bonus Points),” included a calendar with potential points to be earned highlighted for each day. That was followed by seven other emails over the two-week period, with incentives highlighted.
The second group, while eligible to earn the same enhanced cash reward, received only a standard weekly update from Evidation.
The result? Only the group exposed to conspicuous marketing changed their behavior. That group saw daily step counts rise between 3 and 7 percent for each day of the two-week program and the two weeks that followed.
“We have to make [an incentive] really salient to employees so they actually use it,” John says.
Cash is not always king
This combination of incentives with a low-touch outreach campaign could potentially be used to target any number of issues, from helping people quit smoking, to eating healthier, to conserving energy, John says.
Companies can take three steps to rethink incentives.
Try incentives through a pilot program first. Start with a smaller group of participants and, once that is successful, branch out.
Executives should think carefully about what issues or behaviors they want to encourage and whether there is enough interest on the part of employees to get the necessary buy-in.
“You want to focus on things that people want to do and that they have been having difficulty accomplishing on their own,” John says. “That is the sweet spot. You can’t just impose things on them that are not meaningful.”
Promote the incentives effectively. While this could mean sending out an email or text every other day, it could also involve something as simple as hanging a sign with the text that you want to be sure employees see in bold type or highlighted.
“If people feel like you are trying to manipulate them, they may well do the opposite,” John says, adding that sending employees two emails a day, for example, would be overkill. “You don’t want to go overboard. You don’t want to be spamming people.”
Keep reviewing the incentives you offer. They do not necessarily have to be about cash; they could be something like a reserved parking space near the front of the building or a day off.
“Cash is not always king,” John says. “I think you can get more bang for your incentive dollar if you translate it into something meaningful.”
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Feedback or ideas to share? Email the Working Knowledge team at hbswk@hbs.edu.
Image: iStockphoto/AntonioSolano