Incentive Intelligence

The Incentive Compendium - The Next Round

A couple weeks ago I posted a link to our "compendium" of articles from the incentive, engagement, recognition and reward world.  My initial thought was to create one each week.  But that was too much work - and I'm all about reducing the "too much" part of work.

So, I've just added on to the last compedium.  Over time it will grow and grow... kinda like that stuff in the back of your refrigerator.  

This go-round we have about a dozen new posts - listed before the ones I put in last time.  This way - if you're new to the compendium - you can review the history.  If you've seen it before you can just view the newest batch.

This time I've got stories culled from the interwebs by:  The Social WorkSpace, Incentive Magazine, Bret Simmons, Compensation Cafe, Baudville, TLNT and a few more.  All good stuff.

Jump out to the site - check out the various topics and feel free to come back here and suggest other I should be watching.

Have a great Thursday!

 

Related articles

• Just Because I'm a Giver... The Incentive & Reward Compendium (i2i-align.com)
• This Weeks Incentive Industry Compendium (i2i-align.com)

Sometimes a $25 Incentive is Worth More Than $25

Designing incentives can be tricky.  We've seen how they can go very, very wrong (Wall Street anyone?)  Understanding how we humans perceive what is valuable and desirable is an important consideration when designing your program.  Crafting just the right mix of required behaviors and subsequent rewards can break behavioral inertia - creating new actions - or eliminating old ones.  

A friend of Incentive Intelligence (and a world class influencer in his own right - check out our interview with Brian on Blogtalkradio) - @BrianAhearn posted the other day on how the contrast principle of influence affects our choices, and as we are fond of saying here at Incentive Intelligence - incentives are simply choice architectures.

In his post "A $25 Gas Card or $25 Visa Card – Which Would You Choose?" Brian explains how our brain assigns different values to things with the same value.  As an example, he gives attendees in his training sessions a hypothetical choice - a $25 debit card that can be used at a gas station - or a VISA gift card of the same value redeemable wherever VISA is accepted.  When Brian recently made this offer to his group, the majority picked the gas card.

He goes on to explain that when we look at this choice start to do some mental calculus and we begin to convince ourselves that the gas card is more valuable.  We think about rising gas prices.  We think that getting the card now we will get more gas (and more for our money) because surely the cost of gas will rise in the future, therefore, it is worth more today.  Fuel is scarce and expensive - therefore, that card is worth more!

The reality is - as Brian points out... the cards are worth exactly the same - $25.  

And... the kicker... the thing we don't see immediately... is the VISA gift card can be used for gas.  

We aren't always rational.  We aren't always logical.  We "frame" things based on what is going on around us.  When designing incentive programs it is important to understand these nuances of how the mind will perceive the choices (ie: incentives) you put in front of your audience. 

As Brian says as he closes out his post...

"Despite the fact that the Visa card is more versatile – dare I say valuable – if I were running an incentive contest I’d offer the gas card for the simple reason that most people think the gas card is more valuable because they’re comparing it to something scarce, something that might go up in price."

It's not always about the "value" of the item in cold, hard, Vulcan terms.  Sometimes (no - always) it's about how the audience will perceive the value of that choice.

 

Related articles

• Rules for Good Incentive Programs (i2i-align.com)

The Best Study So Far on Cash VS Non-Cash Reward

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I’ve railed against some of the non-cash vs. cash discussions, stating they are red herrings designed to get you to buy one award over another in lieu of sound compensation and reward strategy.  You know I believe that cash is one of the arrows within an employer’s quiver for driving behavior.  You know I believe there is a place for cash.  I like cash.  I need cash (phone number and contact info at top of page btw...)

However, it is not always the right thing to do.  Conversely – non-cash isn’t always the right thing to do either.  You know I believe there are transactional and social relationships inherent in all working relationships and the proper use of cash and non-cash keeps those relationships in their place and keeps you from – as all good Ghostbusters know – crossing the streams.

And you know how I feel about “academic” studies that show a result that is then shoehorned into the real world of getting work done.  Most of the time they can’t/won’t translate.

Now they just might...

Well – I ran into a study that does pretty much what I would have done had they asked me to run the study.  They used a real-world situation, they tested cash, non-cash and non-cash with a “value” assigned to the award.  They looked at both the behavior of the subjects in the experiment as well as their opinions via a survey (action versus intent.)  The only thing they didn’t do was put it in an “incentive” context.  It was more of a “recognition” context (all you Dan Pink fanboys get ready – right up your alley!)  In their terms “a surprise gift.”

But let me give you the background and results and then you can go read the mind-numbing statistics yourself.

It started with this article on Slate titled: “Raises Don't Make Employees Work Harder - But pay cuts make them slack off.”  The article references a study conducted to see if pay increases actually impact performance – and if pay cuts hurt performance.  The study really ended up boiling down to “Is it better to cut pay or cut people to save costs.”  The net-net is that pay increases only positvely affected performance for a very short period, but pay cuts hurt overall performance.  They arrived at the conclusion that in order to maintain current levels of productivity it might be better to lay off workers than cut pay across the board to get the same savings.  

My concern with their conclusions is that the study explicitly stated that the cuts were completely without explanation.  In other words – they didn’t tell the employees why they cuts to pay were being made.  That is a huge flaw in the study and one I’d keep in the back of your mind as you read the results.  Context is everything.  I’d take that study with a grain of salt...

but...

That’s not the good part...

The good part is they reference a study conducted in February 2010 (one of the most recent I’ve found) that talked about performance and the use of cash and non-cash in a real-life situation called “The Currency of Reciprocity - Gift-Exchange in the Workplace”.  

Clouds parting, chorus singing – Nirvana.  Here’s the link to the study for free download.

You gotta love the lead-in abstract to the paper:

"What determines reciprocity in employment relations?  We conducted a controlled field experiment and tested the extent to which cash and non-monetary gifts affect workers' productivity.  Our main finding is that the nature of the gift, not its monetary value, determines the prevalence of reciprocal reactions.  A gift in-kind results in a significant and substantial increase in workers' productivity.  An equivalent cash gift, on the other hand, is largely ineffective even though an additional experiment showed that workers would strongly favor the gift's cash equivalent." (emphasis mine.)

Read that again... cash was less effective even though workers preferred it.  Is it Groundhog Day on the this blog?  

Their premise:

"We hypothesize that, unlike a wage increase, non-monetary gifts or gifts in-kind provide a more salient signal of kind intentions and therefore represent a superior mechanism for the establishment of successful gift-exchange relations. In comparison with money, gifts in-kind are often considered to be more thoughtful and to more credibly reflect regard."

Meaning – non-cash communicates emotions and social contracts – not transactional ones.  And that is double-plus good.

The Experiment...

In a nutshell they measured performance under three set ups... cash increase, gift of a thermos (wrapped as if it were a gift – that’s important) and a gift of the same thermos while communicating its monetary value (that’s for all you trophy-value folks...)

Highlighting some important quotes from the study:

"The results show that the nature of gifts crucially determines the prevalence and strength of reciprocal behavior. An increase in fixed wages has no significant impact on workers' productivity. However, a gift in-kind of equivalent monetary value has an economically and statistically significant effect on productivity. Workers provide 30 percent more output on average. Moreover, this effect remains large and significant over the course of the entire working period. In contrast to all existing labor market field experiments, the elasticity of output towards the change in fixed compensation is remarkably high with 1.54, emphasizing that productivity gains exceed the relative increase in labor costs. We replicate the results with our additional control treatment where we explicitly communicated the exact monetary value of the gift. Treatment differences thus cannot be explained by systematic overestimation of the monetary value of the gift." (emphasis mine.)

So all you gift card haters read that again – when the value of the gift was communicated it had no statistical difference in affect.  For those of you on the “trophy value” side of the equation – booya!  A gift card (a gift with a monetary value) is as effective (in this study) as a gift with no communicated value.  

Aaaannnnddddd.....

"In addition, our results suggest that a higher share of perks in the compensation mix can be profitable for the firm because workers are more likely to reciprocate positively to the receipt of perks."

Plus... as I’ve said a million times – what we get on the survey’s isn’t what we see in behavior....

"Despite this strong preference for cash, the gift in-kind has a substantially stronger effect on workers' productivity than the cash gift. This suggests that the monetary value of the gift is of lesser importance than its signaling character."

It’s About Context

To me this signals a huge leap forward in the analysis of incentives and rewards in the workplace.  It shows me that there is proof that workers will say one thing and actually behave differently.  

It says that compensation establishes the transactional baseline for a job and that awards create a more social and emotional connection which drives behavior.  

It also tells me that the process – how you give the award – is critical in how the employee assigns value.  If you just dump it in with their pay – you stay on the transactional side of the equation and get nothing for the effort.  If you separate it out and provide a “moment” where you recognize and reward – with something other than “pay” – you get a much different – and much more effective result.

Granted they do cover their butts at the end of the study (but what study doesn’t?) when they say...

"While our results show that a non-monetary gift is more likely to increase workers' productivity, it would be premature, however, to conclude that higher wages are generally not able to trigger reciprocity. Given that higher wages are communicated in a relatively neutral manner in our experiment - as well as in Gneezy and List (2006) and Kube et al. (2010) – future studies examining whether there is potential scope for increasing perceived kindness by choosing a more affective framing might be worthwhile.  Such framing could render the gift-character of the wage increase salient."

So there will be a sequel (we hope...)

 

Related articles

• Does Money Really Motivate? (mdeepm.wordpress.com)
• Why Non-Monetary Rewards Are Important (brighthub.com)
• Why Gift Cards Are Tops In Non-Cash Awards (awardofchoice.com)

Thanksgiving Week Melange…

Conferences, Congress and Cash… 3 Posts in One

It’s the week of Thanksgiving.  Meaning there are fewer days of work but the same amount of work.

Tough week.  

Because of the reduced “hours” and not-so-reduced “work” something get’s compressed and that something is this blog. 

Today- three ideas – writ short – to compress the work.  Hope they make sense in their concentrated formula.

 

My Conference Schedule 2011… #HRevolution and FOT 

Asking questions.  Listening to answers.  Hearing new points of view.  Not talking.  Letting conversations evolve.  Hearing contrary points of view.  Hearing questions from non-experts who just want truth – not sales pitches.  Being with people that have a passion for their profession.  Watching people actively work on being better at their job and as people.

Those are the things that I want from my professional get-togethers.

That is the oxygen that drives my curiosity and my recommendations to clients.

That is what makes life and business fun.

That is what I can’t get enough of.

That is what makes me better.

There are two places I can do that in 2011 – #HRevolution and The FOT Show in Vegas.

I urge all my subscribers and anyone who happens across this post to check out their respective sites.  If you’re a practitioner in HR – these two conferences will change your life.  #FACT.

If you’re in the incentive industry and you’re reading this – you should attend to hear the truth about what is on the minds of HR professionals.  Be a sponsor – throw in some dollars and then throw in some time listening.  You will be a better company for it in the long run.  

 

Our Legislative Branch – Rewards and Punishments Out of Whack

The recent Charlie Rangel debacle got me thinking.  Here’s an elected official to one of the highest levels of our country’s political hierarchy accused of 11 counts of “ethical wrongdoing” (what a euphemism) and the "punishment" is reprimand?  Really - "reprimand"?  I guess staying after session and clapping erasers was too harsh.  

This isn’t a comment on Rangel personally – it is a comment on the disconnect between rewards and punishment. 

Here’s my point – when the rewards of a job (like those for  Senators, Congress people, President) are large – good salary, good benefits, cars, expense accounts, free mail – can you say Franking Privileges – the punishments for violating trust in that position should be commensurate.  However, when the punishment is “reprimand” it seems a bit out of whack to me.  

From my experience, the entire equation in corporate America is backwards – the punishment for those at the bottom of the hierarchy are very stiff (mostly getting fired – which is a very big hit) yet the rewards are pretty pedestrian.  Compare that to the perks at the top of the pyramid which are typically are excessive and the punishments are at best – inconvenient but hardly damning.

In a well run organization shouldn’t the reward/punishment thing be a bit more balanced?  Check your own company… do the top dogs get more good stuff and much less bad stuff?  I’m guessing yes.

To me an elected official in our top levels of government who is found guilty of 11 counts of anything bad should be shown the door with their box of personal effects in their arms – including that dying plant and their red stapler.  Just sayin.

 

Cash Motivates

I’ve seen a few more posts on some of the Linkedin Groups I follow with more of the “cash don’t motivate” spam coming from providers of merchandise awards.  They lump gift cards into that pile since they have dollar denominations on them.  

For those that believe that – it’s crap.  

Cash motivates just fine.  In fact too much.  And that’s the problem.  Any provider that says cash don’t motivate – check their grammar and then check them out.  Cash is an effective motivator if applied correctly (which it rarely is outside of compensation.)  

Here’s a study showing that just the mere image of a dollar sign stimulates the reward centers of the brain and increases the subject’s motivation.  To quote the article:

"The study, published in the Journal of Neuroscience, identified a brain region about two inches above the left eyebrow that sprang into action whenever study participants were shown a dollar sign—a predetermined cue that a correct answer on the task at hand would result in a financial reward.

Using what researchers believe are short bursts of dopamine—the brain’s chemical reward system—the brain region then began coordinating interactions between the brain’s cognitive control and motivation networks, apparently priming the brain for a looming 'show me the money' situation.

'The surprising thing we see is that motivation acts in a preparatory manner,' says Adam Savine, lead author of the study and a doctoral candidate in psychology at Washington University in St. Louis. 'This region gears up when the money cue is on.'"

Cash is a fungible reward mechanism in our society.  Get over it and get on with it.  

There are many situations where cash and money are appropriate awards – there are even more situations where it is not.  That’s the key folks – right tool, right time. 

Don’t take a merchandise or travel salesperson’s word for it – their goal is to sell stuff and they don’t sell cash.

 

 

So that’s your Thanksgiving Melange…

Be safe this week and I hope you all connect with family and friends and remember that is the absolute best reward you can get.

Are Incentive Companies Awards Agnostic?

 

If I had a penny for each time I’ve heard an incentive company say they are award agnostic I’d be very rich and very hard to live with (F-U money does that to some people – I’m thinking I might be one – but I’ll never know.)

Most incentive companies use that term to describe their approach to awards.  They believe that by saying they are award agnostic it gives their clients the impression their reward program recommendations are somehow unbiased and more effective.  Nothing could be further from the truth.

 

 

I Do Not Think It Means What You Think It Means

In the movie The Princess Bride Vizzini keeps applying the word “inconceivable” to situations that are in fact actually happening – making them by default “conceivable.”  At one point in the movie Indigo Montoya says to him –

“You keep using that word. I do not think it means, what you think it means.”

(Email subscribers click through here to see embedded video)

That’s the case with the word “agnostic.”  

Some may say I’m a stickler on words.

But in reality I’m a stickler on saying what you mean and meaning what you say.  In this case there is a big difference between what the incentive companies say and what they mean.

Define Agnostic

For those of us from Rio Linda – the real definition (from Merriam/Webster online dictionary) of agnostic is

1 : a person who holds the view that any ultimate reality (as God) is unknown and probably unknowable; broadly : one who is not committed to believing in either the existence or the nonexistence of God or a god

2: a person who is unwilling to commit to an opinion about something <political agnostics>

Now – let’s apply the real definition to the statement “award agnostic” (which by the way, is now in 2nd place in the incentive sales person’s repertoire, right behind – “you only pay for performance.”)

“We don’t know if awards exist or not.”

Or… “We cannot commit one way or the other on awards.”

I don’t know about you but if your incentive company can’t decide if awards exist or are unwilling to commit to awards – then I’d be looking for another company.

 

So what do they really mean?  

They really mean...

“I’ll try to sound smart by using this word ‘agnostic’ and hope you think it means I only care about your program design and not about my commission or my company’s P&L.  I really hope you never look up the word ‘cuz I didn’t.  I just heard it in a webinar a few years ago and it sounded really, really, cool.”

Not Agnostic – Just Indifferent

I don’t think they care.  I think incentive companies by and large only believe in what they can charge for.  

More money = More belief.  

The reason I think incentive companies are indifferent is that most have a variety of award options from merchandise to gift cards to travel.  They have a quiver with a bunch of options readily available to you the client.  They pull out the award that (in order of importance…)

1. You like

B. They make the MOST money on

Third:  They make any money on

If an incentive company doesn’t offer a particular award – say gift cards – they simply either can’t make money on it or they can’t figure out a way to make enough money on it.  If a company only offers a specific award - say gift cards - then they have found a way to deliver those awards as efficiently as possible and have a price advantage over their competition.  At least I can get behind that point of view.  At least it’s honest.  

Here’s my take… by positioning themselves as uninterested in the award type – and wrongly using the word “agnostic” - they hoping they communicate that they are providing unbiased and valuable recommendations.  

They are not.  (See the list above.)

I AM NOT AWARD AGNOSTIC!

I’ve had people describe I2I as award agnostic.  We’re not.  

We believe awards exist.  

We believe very strongly in awards.  We are Gnostic.

We just don’t make any money on them ‘cuz that’s not what we sell.

We believe that there are varieties of awards – and they all have different purposes and applications.  Truth is - when you take the money out of the award equation you get a much better recommendation.

Remove the incentive and you remove the behavior.  

Next time you talk with your incentive sales person ask if they are award agnostic.  They will say “Of course!”  Then ask them why they are so uncommitted to what it is they sell?

They won’t know what hit them.

For the record…

Once again… 

We are NOT award agnostic.  

We’re very much in the “believer” category when it comes to awards.

If you call us then between the two of us we’ll determine the best award (Or if it is even needed.  Now that’s something you won’t hear that from our agnostic friends.)

 

Related articles

• The 2 Biggest Mistakes in Sales Incentive Programs (i2i-align.com)

All Motivation – All Week – Motivation Show

Starting today I’ll be skulking around Chicago for the next 4 days.  The annual Motivation Show is in town and I’m making the annual pilgrimage to motivation mecca.

According to “inside sources” there should be over 8,000 people (some say as high as 10,000 – some say lower – but who cares – it’s a bunch!) – either as exhibitors or looky-loos.  I’m in the latter category.  

I am not exhibiting.  I am speaking at two different places…

Tuesday - I’m talking social media at the IRF education day summit.  Only one of many speakers – but I’m sure it will be the best (kidding – they are all good.)

Wednesday - I have a solo gig called “Responding to the Assault on Incentives” where I’ll walk through how to talk to clients and your own folks about incentives and their effectiveness and need – even in today’s more “enlightened” business world (think zappos and “if-then” awards coexisting.)

Then – during my free time…

I’m really hoping to do more (some) video this year of the show floor with some interviews and commentary to post either at vimeo or youtube.  I keep saying I’m going to do this but it always turns out to be harder than all the articles on video blogging say it is.  Maybe I’m just video-challenged.

I’ll be tweeting – hopefully during my presos with the help of a PowerPoint plug-in – and during the times I’m wandering the floor.  I’ll for sure be using the “official” hashtag #moti – but I’ll throw in a #good, #bad, #ugly tag now and then as I run across stuff.  Unfortunately for you all – my snark instincts go on high alert at the show so expect me to tweet out some rather snide remarks.  If I don’t it’s ‘cuz I’m either busy or I just didn’t find anything you’d find interesting.

Pay attention on Wednesday afternoon!

I (we) have an announcement – one that smart incentive companies will jump on – and not-so-smart ones will deride.  But I’ve got thick skin and I know when I’m right (even when I’m wrong.)  I think it could change the industry (or is that just hyperbole to get you to watch for my announcement – probably both.)

So – as you read this – I’m “en-route” to Chicago – the city of big shoulders, hog-butcher to the world, and for a few days in October - home of cheesy swag, gift cards, chocolate pillow gifts in the shape of corporate logos and all other manner and madness associated with “motivation.”  Abe Maslow would be proud.

It should be fun… it should be funny… it should be interesting.

See you in Chicago!

The Oldest Motivational Disease – “Awardmyopia Itswhatwesellitis”

Look at me.  Now look at your reward and recognition program.  Now back to me.  Now look back to your reward and recognition program.  Now back to me.  Sadly, your program isn’t what it could be.  Do you want a program that really works?  

Here’s how you can get the program you want – stop buying awards.

A Virus Hiding in Good Intentions

We have an epidemic in the motivation and reward industry and unfortunately it doesn’t infect those that spread the disease.  It only affects you - those that come in contact with it.  The disease is caused by companies who have a product to sell and will go to great lengths to create “bullet-proof” arguments that present their offering as the “best” award option.  It’s the best because that’s what they sell.

That disease is “awardmyopia itswhatwesellitis.”

That’s right.  You are the unwitting recipient of a deadly, often fatal and hard to eradicate disease rampant in those that seek to engage and influence behavior through the use of awards.  The disease ultimately tries to convince you that there is ONE award option that will cure your organizational ills.  The disease narrows your vision to a pinpoint of light focused on the award offering a specific vendor provides.

Symptoms and Progress of the Disease

It starts simply enough with your search on google for motivation or incentives.  It then progresses to research at various provider websites talking about rewards – gift cards, merchandise, travel, logo-identified mugs.  At these sites the disease attempts to soften the left side of your brain (logic and rational thinking) through sketchy research and sponsored studies proving the disease is beneficial – like bacteria in yogurt.  Once you’ve succumbed to the sites it then manifests with a meeting and a capabilities presentation that highlights services and previous infectees who are happy with their strain of the disease.  

At this point you are unaware that you now have the disease – but it is working feverously inside your brain.  The next step in the infection is where the real problems occur.  Because all the carriers of the disease have similar structures your brain looks to focus on the one place they differ – the award option. 

With the disease’s prodding - you begin reviewing and evaluating the award options each strain presents.  Your infected brain, now spends hours and hours in MSExcel comparing award pricing – working hard to find that pricing sweet spot that will be most receptive to the next infectee – your manager.  You now become the unwitting carrier of the disease, infecting your manager and they in turn infect their manager, until most if not all the staff believe that to solve the initial problem the best priced award option is the appropriate choice.

Unfortunately, this disease is crafty.  It dulls the critical thinking part of the brain – hiding the real truth and the real question…

“Do you need awards at all?”

The disease plays upon the fact that you started the discussion.  You’re the one that wanted an incentive and reward program.  You’re the one that wanted to look at awards.  

The disease just gave you what you asked for.  It was being helpful.  It was doing YOUR bidding.  

But in reality you wanted a program that drives behavior change.  You really wanted a program that gets employees to feel good about working at your company.  You just wanted a program that drives your channel to buy more and recommend you more often.  You wanted a program that gets results.  You wanted a program that works best for your company and your audience.

Unfortunately, what you end up getting is recommendations for specific award options that are best for the provider of that specific award option.

The disease changes the conversation from “how do I influence behavior to achieve ‘x’", to "who’s award is best?”

A Cure Is Out There…

I’m wearing a ribbon on my lapel shaped like a trophy to bring attention to this disease.  There is a cure but you need to do your part.  You need to step away from the awards.  You need to look at me – then look at your awards and then back to me.  

LISTEN carefully – YOU DON’T NEED TO LOOK AT AWARDS UNTIL AFTER YOU’VE DEFINED THE REAL PROBLEM.

All strains of the disease from gift cards to merchandise to cash – are effective in the right measure.  All these award options can influence behavior.  There is NO ONE RIGHT AWARD.  Read that again.

Prevention

Take time to inoculate yourself from this epidemic.  It’s simple but hard.  

Just ask…

• Is the problem an issue of motivation and engagement – or is it something else?
   
• What does my audience say is the reason objectives aren’t being met?
   
• How would I solve this problem if there was no such thing as incentive programs?
   
• Where did I put that number to I2I so I can get some unbiased advice on how to influence behavior?
   

Seriously though – don’t assume the award is the answer.  Don’t let the carriers of “awardmyopia itswhatwesellitis” craft your decision criteria.  

Be thoughtful.  

Be aware.  

Be careful.