Jacob here, with a confession: I’m a big believer in the power of incentives (yes, I studied economics). When I was a kid, my parents offered me $10 to not bite my nails for a full month. Sure enough, I stopped biting them… for some time, at least.

Employers also offer perks and benefits to incentivize certain behaviors. Want employees to save for retirement? Offer them a 401(k) match. Want your employees to take care of themselves? Offer them free mental health services. But not every incentive achieves its target outcome.

“People designing incentive programs may think, 'If you build it, they will come,'” says Hayley Blunden, assistant professor of management at the Kogod School of Business at American University. But a paper by Blunden and several co-authors, published this past fall in Organizational Behavior and Human Decision Processes, shows the limitations of that belief.

Partnering with Evidation, an online platform that rewards healthy activities, the researchers ran a field experiment with about 2,000 participants. For two weeks, participants received 40 times the platform’s typical reward for walking, earning $40 for every 200,000 steps taken (as opposed to the usual $1 reward). All of the participants were made aware of the bigger reward through Evidation’s standard weekly email stating each user’s point balance. In addition, half of the participants received a kick-off email about the increased incentive and an email every other day reminding them.

Participants in the group that received the frequent reminders took, on average, 367 more steps daily than those in the other group. What’s more, people in the group that didn’t receive the reminders didn’t walk any more than people who received the original, smaller reward of $1 for every 200,000 steps.

The takeaway: Increasing the incentive alone didn’t change behavior—making the incentive conspicuous did.

The implications for HR leaders are wide-ranging.

As this paper shows, the presence of incentives alone doesn’t always create the desired behavior. “Without making sure that [incentives are] conspicuous, that people have the opportunity to become aware of them—but not just that initial awareness, a repeated awareness over time—they may not be effective,” says Blunden.

How can companies use this insight to increase employee participation in the benefits and perks that they offer?


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