Can You Pay People to Do What You Want Them to Do?
On monetary incentives
Monetary incentives have been quite a controversial topic. Initially, we thought that monetary incentives were everything we needed to motivate people. Then, we realised they often don’t work. Now again, we are seeing how the effectiveness of incentivising with money is more of a case-by-case kinda happening.
Today we’ll cover:
commitment devices
when incentives go wrong
can we pay people to do what we want them to
Commit!
The story told and retold--and honestly my favourite myth-- is that of Ulysses and the Sirens.
Ulysses wanted to pass near the rocky shores but he knew that the call of the sirens would bring him and his mates to the rocks. Therefore, he ordered everyone to cover their ears, but…he also wanted to hear. So he tied himself to a pole. For Ulysses, it works well, because he found a way not to fail.
Dan Karlan, a guy slightly obsessed with his weight, founded Stickk on the assumption that increasing the price of one’s vice is a good way to commit to stuff. It all started when he and a friend, having gained weight, put 10k on the line to give to each other if they hadn’t lost weight. This kept it on his feet, and slim. When his friend regained the weight, he asked for the money.
“stickK is an ever-evolving Commitment platform with the tools to help you achieve your goals. Here are some people from all around the world who are stickKing to theirs.”
Yes, people put money on the line to get shit done. According to Karlan, too often it is too cheap to have bad habits.
There are other commitment tactics.
People place money in saving accounts where they can lose interest gain if they take money away; some people put stuff in their calendars so that it feels like a contract; others do what they gotta do.
Monetary Incentives can go wrong when the goal is …wrong
Imagine incentivising with a bonus. Now, imagine you incentivise a bonus for employees who “get the best customer satisfaction”, what would an employee do to gain that?
Now imagine the incentives are given for the most sales in a day. What would an employee be willing to do then?
Let’s think of Wells Fargo.
Wells Fargo management put pressure on lower-level bank employees to aggressively cross-sell products to increase sales and revenue in order to fulfil certain goals, which is when the issues started. When Wells Fargo staff subsequently opened millions of savings and bank accounts for consumers without their knowledge or consent, deception raised its ugly head.
Staff at the bank branch engaged in unethical behaviour to meet the company's sales targets. To keep clients from learning about the scam, they started filling out forms with their own contact information. Employees are alleged to have opened fictitious checking and savings accounts by transferring funds from the original accounts into the new ones.
You can read more about it here: Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal (forbes.com)
Or watch:
Can we pay people to do what we want?
In behavioural change research, it seems like we can, and can’t. It is very context-dependent, and people are still trying to figure out the variables at play.
For example, monetary incentives appear to work to get pregnant women to stop smoking.
It also works to get people (though unfortunately, this has sociological problems) to donate plasma and blood.
But it doesn’t work for other things, like healthy diets, or better work performance.
Going back to the idea of the right incentive, I think that if there is something we can do now, is incentivised for the right tasks. Less about production, more about quality.
Money can be a powerful motivator, but other things appear to motivate people more: a sense of purpose, mastery, and creativity.