Many foundational studies in behavioural economics showed that the relationship that people have with financial incentives or penalties isn’t quite what is predicted by the standard economic model. People value losses more than they value equivalently sized gains, disproportionately prefer today over tomorrow, and love large gambles while avoiding smaller ones.
We’ve seen that when people are fined for collecting their children late from school, they turn up later than if it was free, and if people are offered a small payment to do something they’re less likely to do so than if there was no payment at all.
Other studies have shown that people can be motivated by the desire to help others, or because they feel a sense of reciprocal obligation to do so. In fact, people are so motivated by non-financial incentives that researchers have begun to wonder whether people might be motivated by nothing at all.
One of the first people to research into so-called “symbolic rewards” – those with no tangible value – was Jana Gallus, one of the winners of our Behavioural Scientists of the Future awards at Behavioural Exchange 2015. Gallus’ research looks at whether symbolic prizes for editing a certain number of wikipedia pages can be motivating for wikipedians – she found that this increased the long run retention of editors by 20%.
There’s a growing body of studies (including our own study), from different countries, domains, and even fields of research, suggesting that these kinds of symbolic “Thank you” rewards can be impactful.
In Germany, Michael Kosfeld and Susan Neckermann found that symbolic recognition increased performance in a data entry task by 12%, while across the pond in the United States, Adam Grant and Francesca Gino showed that university fundraisers who were given an unexpected symbolic reward were more effective than a group who did not receive the same award. Nava Ashraf and colleagues also found significant increases in test performance of health workers in Zambia after they had received recognition from their employees.
So, should managers start doling out thanks and symbolic rewards to their employees? Sadly, the research suggests not. A follow up study by Kosfield and Neckermann, which unpicks the mechanisms behind this effect, finds that symbolic recognition can work because it creates a sense of meaning to people’s jobs – which might not happen if thanks is indiscriminate. Sometimes it’s more motivating not to receive praise – Robert Dur and colleagues find that when high performers are given a symbolic reward, the biggest increase in performance is among those that don’t get the reward.
Incentives can be powerful tools to change behaviour, but increasing evidence suggests that the basic premise that higher incentives lead to increased effort and performance does not always hold.
The best way to motivate staff is likely to be a combination of traditional incentives and letting them know that they’re appreciated, and that their work had meaning.