How To REALLY Design an Incentive To Drive Behavior

There are no shortages of people telling you how to get things done at work. I’m one of them. There is, however,  a shortage of people who will HONESTLY tell you how to get things done at work. Too often advice on the internet is buried deep inside a sales pitch designed simply to sell you – not support you.

When I’m engaged to help design an initiative to influence behavior in a company – either for employees or for channel partners I don’t simply sell.

I solve.

Here’s a long – but accurate example of how to design a program that will influence behavior but not “sell” a point of view.

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Incentive for Reducing Travel Costs

I saw this on an incentive company site – and I’ll post it verbatim (names changed to protect the “guilty”):

“As the cost of air travel continues to rise, many businesses are creating new employee incentive programs that reward them for following the company’s travel policies, according to the New York Times.

Travel experts told the Times that many companies have instituted a points-based program to help reduce overall costs.

“If you book according to the air travel policy, you get 10 points,” a travel consulting expert told the paper. “If you book a hotel within the policy, you get 10 points. A rental car – you get 10 points. If you do all three, you get a bonus of 20 points.”

After an employee accrues enough points, he or she can trade them in for all kinds of products, or even expensive vacations.

 

This company was using the article as a way to communicate to potential clients that using points-based incentives are the way to reduce travel costs.

And – potentially that kind of program could work.

I’m guessing the conversation went like this:

Client: “I have a problem – I need to reduce travel costs.”

Incentive Company: “Great, we’ll give people points for saving the company money. The award amount will be calculated to be big enough to move their behavior but low enough that you’ll end up netting a cost reduction overall. The program will be designed so only those that adhere to the policy get the points. They can then redeem them for merchandise and travel.”

Client:  “Cool.”

 

Solving Not Selling – An Alternative

First of all –the issue here is that the company wants to reduce travel costs. Okay – got it. The goal is reduced travel expenses.

Second – they have a “policy” in place that outlines the rules and regulations associated with travel paid by the company. I’m guessing the policy is based on negotiated rates on specific airlines, rental car companies, and hotels.

First Steps

Before you should even look at an incentive solution ask these types of questions:

  • “What are all the elements that affect the use of travel in your company?”
  • “Who approves travel requests?”
  • “Who determines when travel is warranted?”
  • “Do you have other technologies that could be used in lieu of travel but aren’t getting the appropriate use?”
  • “How has the policy been communicated throughout the company?”
  • “How are costs reported and communicated to those responsible for actually saving the money? Do they know where they stand against your reduction objective?”

And the biggest question I would ask and one the one I’d point out immediately…

  • “Why do you need an incentive for a policy?”

The most important question isn’t about the type of incentive – it’s about whether you should even have and incentive in the first place. Very few incentive companies will try to uncover the fact that you don’t need an incentive.

After all – what would they sell you if they didn’t find an incentive at the bottom of the pile?

But I digress.

Let me ask this – do you think the company who has a travel policy also has a drug usage policy? How about an “ethics” policy? Do you think they have other purchasing policies for expenses such as office supplies or other business services? I’m guessing yes.

Now, do they have incentive programs attached to those other policies? Probably not.

Probably not.

Incentives Are Choice Architecture Elements

Incentives are designed to provide participants with a decision. The goal is by adding an incentive to a decision increases the likelihood of that decision being made. By default, when you put in place an incentive program, you’re communicating to your participants they have a choice.

“Book airfare according to policy and earn points – or don’t use the policy and don’t earn points. Your choice.”

Or…

“Don’t use drugs in the workplace and earn points – or use drugs and don’t earn points. Your choice.”

Is the disconnect obvious now?

When to Discontinue?

The other main problem with this structure is what do you do in a year? Continue the program? Cancel it? Will the participants simply shift back to old behaviors when the incentive is gone? Probably.

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Things I’d Recommend

  1. Train Managers – this isn’t a behavior problem, it’s a management problem. It’s a compliance, communication, education, understanding problem. It’s a culture problem.
  2. Communicate Better – leverage the principle of consensus and social proof by alerting the employees to those that are doing it right – show them the progress against the company goal of saving money.
  3. Recognize – find ways to recognize those that are having impact – make it genuine and make it come from the CEO. After all – it’s his/her objective is it not?
  4. Link to the Company Culture – Communicate to employees that if they aren’t following policy (assuming your policies are pretty good, normal and valuable) they are outside the culture sphere.  Communicate that they aren’t a good company citizen. We all want to be part of the cool group.
  5. Some may not like this but – punish those that repeatedly violate the policy. You wouldn’t put an incentive in place for repeat offenders of any other company policy would you? Nope – you’d document, discuss and finally – disconnect the employee from the company.

None of the above recommendations are focused on any “choice” the participant can make. My recommendations focus on the root cause of the problem… people aren’t following policy.

Find a way to communicate the policy better, link it to culture, recognize those that adopt quickly and finally – punish those that don’t.

Bottom line – this isn’t about incentives and motivation.

What do you think? Is this really an incentive application or is it a different root problem? Hit me in the comments – I have thick skin.


Photo credit: garybirnie.co.uk via Interior Design / CC BY-ND


 

3 thoughts on “How To REALLY Design an Incentive To Drive Behavior

  1. Pingback: Paul Hebert dishes on How To REALLY Design An Incentive To Drive Behavior - Fistful of TalentFistful of Talent

  2. Pingback: Paul Hebert dishes on How To REALLY Design An Incentive To Drive Behavior | Hire Daily

  3. I agree, and I would go one step further to say that many “HR” programs could be eliminated or reduced by following your recommendations. I know that it’s good to give positive reinforcement, but at some point you just need managers to manage their teams. I’ve seen policies spiral out of control because managers are scared to manage and instead build out policies to encompass every possible situation.

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