The latest episode in our Resilience Unravelled series has now been released, Resilience Unravelled – Incentives and rewards. It’s not all about the money.
In this episode, Dr. Russell Thackeray talks to Kurt Nelson, a behavioural scentist from Minneapolis in Minnesota. Kurt is president and founder of The Lantern Group, a consultancy that focuses on the application of behavioral science in corporate settings. As well as helping companies improve their employee’s engagement and motivation, Kurt works with them to design and leverage their HR initiatives, employee communication, incentives and rewards programs to drive employee behavior that delivers bottom-line results.
Kurt has always been fascinated by people. When he was studying for his MBA, a class on consumer behaviour started him thinking about why people do what they do, how they are motivated and how their behaviour can be changed. Kurt feels that we do things because we are emotional creatures and make gut judgments rather rationalising something. We are driven by things beyond our conscious mind and influenced by many things such as our environment, the people we have around us and our own self-identity.
There is no single definition of what an emotion is. When he uses the term ‘emotional’ Kurt is not talking about being happy or sad, rather that we don’t always look at things from a rational point of view. We don’t go through a process of ‘trade offs’. Instead we respond through System 1 or System 2 thinking. System 1 thinking is fast, automatic and emotional whilst System 2 is slower, more logical and requires effort.
Behavioural biases also play a role. These behaviours can unconsciously influence our decision-making process. Emotional biases are based on our feelings rather than concrete facts and by letting our emotions affect our judgment. It would be impossible to think through every decision we make. Biased thinking makes it easier to make decisions – what worked in the past will work in the future. Sometimes though biases kick in. System 1 thinking provides a shortcut but may stop us thinking things through.
Behavioural science can provide a different way of thinking about rewards, incentives and recognition at work. There is a very traditional way of looking at it, more work for more money. However, after a certain point, the monetary reward has to increase considerably to work. A day off, recognition or praise can provide more of a lift. To the younger generation especially, meaning is often more important than hard cash.
Trips or gifts can also provide another big lift. This goes against economic principles. In theory by giving more money the employee has a choice about how they spend This however is not always true. Being given a new set of golf clubs or a paid weekend spa trip means there is no guilt about the way the money is used. It’s been paid for so the money cant be used to pay the mortgage or bills. There is also an element of luxury when talking about incentives. Things we wouldn’t generally buy for ourselves are often more motivating than cash. These types of rewards are the kind an employee can be proud of or give him bragging rights – e.g. “I won that! There is no “indulgence guilt” that would have come from spending their own cash on a luxury item.
It’s important to find out what are the underlying drivers to employee behaviour. What do employers want their employees to do differently? What are their motivations? One mistake that’s often made is to think that what would work for one person will work for another. Not everyone is motivated by cash. Some people find meaning and purpose more motivating. Projecting the same set of motivators for everyone won’t work. It’s important not to transfer inner feelings. We need to get a better perspective as a business as to what inspires, motivates and gets people excited about what they do.
You can get in touch with Kurt at:
Kurt also has a podcast with Tim Houlihan called Behavioral Grooves where they explore the applications of behavioral science with insights from academics, practioners and accidental behavioral scientists. Then spin stories and talk about musical playlists that somehow tie it all together. This is available at www.behaviouralgrooves.com
You can listen to the podcast in full and find out further information about Kurt here.
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