How to Avoid the Perils of Rewards Programs

Rewards

A recent academic study is catching a few headlines, suggesting that award programs can have negative motivational spillover effects and actually lead to decreased productivity.

The study focused on an award program for attendance, implemented by a plant manager in one facility of a commercial laundry company.

There are a number of reasons why I am not surprised by the findings once I had the chance to read the study.

Essentially, giving awards for attendance is very different from, and much less effective than, social recognition programs. It’s no surprise that senior leadership canceled the program as soon as they learned about it.

Why a rewards program didn’t fly

Here’s my take on why it didn’t work out.

Let’s start with the basics of the “award” program, as operationalized by the research team.

  • It was formally established by management.
  • It involved public recognition of winners who receive something tangible and valued. It involved elements of scarcity and competition.

The first two components are a good start, but having scarce awards for something that management expects everyone to do (e.g., show up on time) just doesn’t make sense. How motivating will an award be when the desired behavior has such a low ceiling? It’s no wonder the program backfire.

Including competition is another strike, not only because of the same reasoning mentioned above, but also because of the potential for employees to game the system, which the researchers found was occurring.

Employees will adapt their behavior to just be within bounds of the eligibility rules that are dichotomized (e.g., eligible versus ineligible), rather than continuously exhibit discretionary effort. Ex ante awards like this are also more about checking the right boxes, changing the very definition of the desired outcome from what was initially expected.

A basic expectation

As for the outcome itself? Attendance for many — if not all — companies is a basic expectation. It does not fall into the same set of behaviors that organizations actually care about in terms of encouraging high performance.

The danger in aligning an award program to attendance then is signaling the relative weight of expectations away from productive behaviors and more towards basic behaviors. It is clear how this would have a negative impact on those employees performing beyond the level of needing to be told to show up for work on time.

This study is a perfect example of the misuse of a reward and recognition program, rather than a telling assessment of the negative consequences of workplace awards.

  • If the goal is to remediate poor behavior, there are other more effective strategies (e.g., penalties, warnings, and punishments) that can be specifically targeted toward problem areas.
  • If the goal is to reward employees, more thought on these issues needs to be given in terms of the design of the program and its intended use.

On the other hand, if the goal is company-wide encouragement of positive behavior and performance, a well thought out rewards and recognition program can provide the motivation that all employees can benefit from, “catching” positive examples from all levels of performers as they occur.

Where have you seen rewards and recognition go well and not so well? What were the defining features that made a difference to you?

You can find more from Derek Irvine on his Recognize This! blog.