Research on How Online Reward Programs Impact Teams

by: Steve Damerow October 28, 2015

Incentive Salience and Improved Performance

  • Early work by Kahneman and Tversky (1973) studied what was called an availability bias. Their research showed that when people estimate the likelihood of an occurrence they use a short-cut (heuristic), using how easy instances of an event are to recall as a proxy for likelihood. In this research they also showed that vivid items and events were more available, that is, likely to be stored in and retrieved from memory, than more pallid items and events. We feel that tangible in-centives fit the definition of vivid items, described as those items “... likely to attract and hold our attention and to excite the imagination to the extent that it is a) emotionally interesting, b) concrete and imagery provoking, and c) proximate in a sensory, temporal, or spatial way” (Nisbett & Ross, 1980, p. 45).
  • Comparing the cash and noncash locations, those participants working toward a noncash incentive thought more frequently about their reward than those in the cash condition.
  • The article shows that tangible incentives, noncash incentives with nontrivial market value, are thought of more frequently than a cash incen-tive of equivalent purchasing power.
  • We show that tangible incentives outperformed cash in driving desired employee behavior.

 


 

The State of Tangible Incentive Research: the Use of Tangible Incentives

  • In “Recognizing Good Attendance: A Longitudinal, Quasi-Experimental Field Study” (Markham, Scott & McKee 2002) the authors documented how personal recognition and the use of premiums reduced absenteeism among four cut-and-sew garment factories in each of four quarters measured. Reductions ranged from 29% to 52% each quarter for reward recipients, with reductions not found in control groups.

 

Survey: Noncash Rewards Boost Performance and Morale

  • For employees that already participate in company-driven incentive programs, participants say the programs have made them:
    • Feel more valued (85 percent).
    • Happier and more motivated at work (70 percent).
    • More loyal to their company (65 percent).
  • While incentive programs are often tailored to the needs of individual organizations, there are common elements and best practices that contribute to success. These include:
    • Aligning the program with established business goals.
    • Selecting effective rewards.
    • Promoting involvement from every level of the business.
  • Incentive program participants’ top three recommendations for improving their companies’ incentive programs were:
    • Increasing the frequency of rewards (51 percent of respondents).
    • Offering more reward options (47 percent).
    • Making it less difficult to earn rewards (36 percent).

 

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About Steve Damerow

Steve Damerow is the Founder of Incentive Solutions, an incentive program provider in Atlanta specializing in helping B2B companies increase distribution channel sales, establish customer loyalty and retention, and develop long-lasting channel partnerships.