Behavior Matters!

Harnessing the power of behavioral science to improve how organizations, leaders, and people work

Category: Motivation (Page 2 of 8)

Behavioral Based Incentives: Do’s and Don’ts

Behavioral based incentives (incentives that recognize behaviors and actions instead of results) can be very powerful motivators inside of a company’s overall reward framework.  In many instances, behavioral based incentives are the only way that an organization can recognize employees for work that is vital to their success.  This includes times when outcomes cannot be effectively measured, where outcomes are not immediately contingent on individual contributions, and where there may be ethical or legal components that prohibit outcome based rewards.   Research also suggests that behavior based incentives can be advantageous to the organization in a number of ways including but not limited to: the ability to reward long-term behaviors that will not have a short-term payoff, improve fairness of recognition due to inequities in the market place, provide more focus on soft-skills necessary to long-term success, and help drive non-sales activities that are desirable by the organization (Anderson & Oliver, 1987 & 1994; Baker, Jensen and Murphy, 2012).

While behavior based incentives can be very powerful motivators, they also can have a negative impact on overall moral and motivation if not properly implemented.  There are a number of potential pitfalls with how

Some Potential Roadblocks:

Ambiguous measurement / Perception of fairness: Behavior based rewards often have ambiguous qualitative rating processes which can result in different interpretations of the same behavior or action.   In other words, one person might feel that they are exhibiting exactly the right behaviors while another would view those same behaviors as poor or unsatisfactory.  This dual interpretation can lead to individuals feeling as if they are being unfairly measured.  Research by Meyer has shown that 58 percent of employees rated their own performance as being in the top 10 percent of their peers and that 81 percent rated themselves in the top 20 percent while less than 2% of the people rated themselves below the median.

Lack of Trust: Individuals often state a lack of trust in both the organization and in their manager to effectively be able to assess their performance.  Often this is related to the perception of fairness listed above, but many times this is also the result of lack of understanding on the incentive process.

Short time horizon vs long term impact: Behavior based incentives are powerful motivators, in part, because individuals can be rewarded shortly after they exhibit the desired behavior, thus reinforcing that behavior.  This short-term focus however, does not always correlate to long-term success.  Thus behaviors often revert back to the status quo once the incentive is removed.

Gaming the system: as in any incentive scheme, behavior based incentives can be gamed.  Participants might act differently when they know they are being observed by their manager or otherwise try to create a false impression of their behaviors.

Some Best Practices:

Specificity: There needs to be a very clear definition of what is being measured and how it is being rated.  This specificity needs to be clearly understood by both the participant and the manager.  While this does not imply that there cannot be qualitative judgments made about an individual’s behavior, it does mean that the manner in which those judgments are determined needs to be transparent and agreed to in advance.  This requires significant investment prior to implementation to fully identify, define, communicate, train, and create tools to ensure full understanding.

Leaders should ensure that they have fully invested in the measurement process and communication of the behavior measures.  This includes:

  • Clear definitions around behavior expectations
  • Behavior examples that are used as illustrations for expected behaviors
  • Training campaign for managers on both “how to” measure as well as “how to” communicate their rating (provide feedback)
  • Communication campaign that clearly and succinctly highlights expectations and outcomes

If there are quantifiable elements (that are relevant and valid) that can be included as part of the overall measurement process, these should be included – even if they are used as back-up or reference components and not directly tied to the payout.

Measurement process calibrated across managers:  Key to success is the consistent rating of individuals across managers.  Top organizations ensure that there is training on how to measure, but also do periodic check-ins to ensure that the measurement process is calibrated (i.e., that managers are giving similar ratings for similar behaviors).  Note, this is not a calibration of ratings at the end of a quarter or period, but a review of processes and feedback for the managers for how they can be consistent to the norm.

Milestone check-ins with long-term bonuses:  Behavioral economics shows that individuals place higher value on relatively smaller rewards that are achieved in near term over larger rewards that require longer time horizons.  Motivational research shows that near term rewards can drive quick uptake on behaviors, but does not correlate to long term behavioral change.  However, incentives with longer time horizons have been shown to drive more long term behavior adoption.   Combining these factors, best companies have used a process whereby they have a long-term bonus kicker with short-term milestone check-ins.  Often, short-term check-ins are done as on-the-spot rewards given by managers from specific discretionary budgets for this purpose.

Purposeful Change – 6 steps to help keep you motivated and achieve your goals

Based on new research from behavioral economics, neuroscience, motivation and habit formation…six steps that can help you get and stay motivated to achieve your goals.

It’s all about people

“ The bottom line in all of it is that, in life, it’s all about people.”  Colin Powell

I saw Colin Powell speak way back in the 1990’s and I can still remember one part of his speech.  He talked about how he had two dogs – a small dog and a big dog.  He stated that his small dog was the alpha and had no fear.  He stated that this was because the small dog’s only reference point was the big dog.  It looked at the other dog, saw that it was big and powerful, and assumed that it must be big and powerful itself.

It is often the same with people.  We tend to use the people around us as reference points on who we are.

A study published in the New England Journal of Medicine showed that, “A person’s chances of becoming obese increased by 57%  if he or she had a friend who became obese in a given interval.” (Christakis & Fowler, 2007).   The theory of self concept explores how we view ourselves – which is shaped by who we hang out with and who we surround ourselves with.  Jim Rohn states, “You are the average of the five people you spend the most time with.” 

So it’s all about the people you surround yourself with.

Do they have a positive outlook or a negative one?  Do they work hard or not?  Do they live life to the fullest or complain about what they are lacking?

So ask yourself this – who is in your circle of friends?

 

We need your thoughts and experiences on change and achieving your goals

[polldaddy poll=7082655]We are looking for input from people like you to answer some questions on how you were able to change something in your life or set out and achieve a goal.   We want to understand how you were able to lose weight, get a promotion, start a new hobby, eat healthier, change a bad habit, start a new positive habit, complete a project, etc…).  We are trying to uncover the underlying factors that help people purposefully changed a behavior or attitude.  This research will be used as input to a model of change that we are developing as well as possible inclusion in a book we are writing on the subject.  In the comment section, please share the following:

1) What did you purposefully set out to change or achieve?

2) What was your motivation that drove you to that do this (was their a specific trigger or was it something that you had focused on for a long time)?

3) What were the key actions that you took to achieve that change or result?

4) Did you change things in your environment to achieve this (i.e., move the treadmill into the bedroom or hang a progress chart on the wall)

5) Did you tell people (or a single person) what you were trying to do?

6) Did you set milestones to your goal?

7) Did you measure your progress against those milestones?

8) What was the hardest part about the process?

9) What was the most important part of your change journey?

10) What tips would you give for someone else who is trying to change this aspect of their life?

Leave your response in the comment section 0r send me an e-mail at kurt@lanterngroup.com   – Thank you!

Ignite your motivation

This blog has Ignite your motivatoinbeen kind of quiet lately – partly on purpose and partly because life is busy.

The on-purpose part of being quiet was brought on by a post I read by Derek Sivers blog (http://sivers.org/boring) on whether it is better to focus, entertain or both?  The underlying message being that we sometimes put out content to just put out content, when instead we should be focusing and developing our ideas and build a “path to mastery.”  It is a great conundrum that we all face…as Derek says, “you’ve got a conflict: What’s best for you is to shut up, sit down, and focus. What’s best for them [audience]… is for you to be entertaining.”

That being said, I’ve been working on developing a few concepts that build off of what we’ve done in the past, but reflect a new approach for us.  This required me to shut up, sit down and focus.

As readers of this blog know, we have concentrated on improving employee motivation at an organizational level for years.  We put a lot of stock into understanding the research out there on this topic and not just repeat the same old ideas.  For instance, outside of the original researchers, we have probably done more work on the 4-Drive Model of Employee Motivation than anyone in the country (see here, here, here, here and here for just a sample of our thoughts on this).  We think that this motivational theory offers companies new ways of looking at their reward and recognition framework that is refreshing and helps drive motivation in exciting ways.  We used this and other research (mostly insights from behavioral economics and psychology) to help organizations set up reward and recognition systems that tap into these insights and improve employee motivation and engagement.  We’ve done exciting work with a number of large and small companies helping them do this.

What we hadn’t done is focus on what individuals could do to improve their own motivation.

We had not explored how individuals, such as yourself, keep on task and stay motivated to achieve your goals?  How can we leverage the new research that is out there to help us stay motivated everyday.

So we are shutting up, sitting down, and focusing on that.

And it is fascinating.

Recent work by researchers on habit formation, willpower, and individual change have shed light on a number concrete steps that we, as individuals can do, to help keep us motivated and on task.  We have taken the first strides in  building a process that melds together all this research into a few main concepts that can be framework for a personal motivation plan.  Our initial work has led us to develop a five step process, that we think will not only help people to ignite their own motivation, but also to build ways to maintain that motivation for the long run.  These five steps are:

1) Find your motivational flow

2) Recalibrate your habit triggers

3) Enable your daily environment

4) Socialize your motivational strategy 

5) Track your goal progress

Each step has both research and real actions behind it.

We are still working on this and are looking for collaborators to help refine the process and test our assumptions.  The idea is to create a workshop and support materials that can be piloted. In the near future, we will be testing the model and piloting the process with a few people.  If you want to be part of that group, let us know (leave a comment below or e-mail kurt@lanterngroup.com) and we will put you on the list and you can be one of the first to try it out.

As always your thoughts are appreciated.

Labels – why they “are” and “are not” important

PlutoThe 9th Planet

Growing up in the 1970’s I had a fascination with Pluto.

It was cool.  It was the farthest planet from the sun.  It was the smallest planet.  It’s orbit intersected with Neptune’s and sometimes was closer to the sun and other times further away – but it would be 100’s of years before that happened since it takes over 200 years to orbit the sun.  It was the last planet discovered and it was discovered because they were looking for planet X.  It was cold and icy and mysterious.

I mean it couldn’t get much cooler.

The only downside was that Mickey Mouse’s dog was named after it…

But then, in 2006, the International Astronomical Union (IAU) downgraded Pluto from the 9th planet to a dwarf planet.

Now, the basic make-up of Pluto hadn’t changed.  It’s orbit was still the same.  It’s size the same.  It’s history hadn’t suddenly been altered – but Pluto was no longer a planet.

And now, my son, who was born in 2006, will never know Pluto as the 9th planet.  It will be just one of the many dwarf planets that are in the Kupier belt and not even the biggest one.  He won’t be reading about it in any of the new solar system books.  He will grow up in an 8-planet solar system.  Our knowledge of the solar system changed, and with it, so did Pluto.

But Pluto is still Pluto – only it’s label has changed. 

3 letters

I started my PhD process in 2003.  It took me 8 years to finish.  Over those years, I learned a lot and my experiences grew (mostly in the first few years where I was taking classes and researching my topic and less in those last 5 years when I was trudging through writing my dissertation).  However, the difference in knowledge and skill the day before I earned my diploma and the day after I earned my diploma was zero.

But people looked at me differently – my label had changed. 

I taught the same sessions.  I did the same consulting work.  Yet, I was now viewed as an expert.   I had three letters after my name and that gave me clout and authority.  It actually changed the way that they experienced the information that I shared with them. 

People who didn’t know me prior to my PhD would never know that I was once just one of the many struggling students out there working hard at getting their dissertation done.  To them, I was Dr. Nelson.  Just as my son won’t think of Pluto as a planet, these people will not think of me as anything but having a doctorate.

And that changes how they perceive me.

But I’m still me.  Pluto is still Pluto.  We just have different labels…but those labels change how people view us.  They can change the dynamics that we have with individuals – how much attention we get, how much credence is placed on us, and how they interpret the information that we provide.

And remember, we place a lot of labels on people: president, chairmen, all-stars, diva’s, minister, deviants, heroes, just to name a few.   Those labels impact how we interact with those people – but underneath it all, we need to remember that they are still human beings.

More info on Pluto here: http://en.wikipedia.org/wiki/Pluto

Improving performance in uncertain times using non-cash incentives

Change creates an emotional response

Even in the best of times, companies experience different competitive and environmental factors that can lead to organizational change and thus employee uncertainty. In hard economic times, those changes occur at a much greater pace and employee uncertainty can be even greater.   Employee uncertainty creates a number of challenges for organizations as employees often feel anxious, disillusionment, disappointment, confusion, and even anger over their lack of control in an unknown situation.  This often leads to decreased employee motivation, focus and subsequent decreases in productivity and performance.

Companies can employ a number of different mechanisms to help recharge employee motivation in changing environments.  One key mechanism is the use of targeted incentives to help engage employees and focus them on improving productivity.  Because incentives can be structured in a number of different ways and use a variety of reward options, it is important to understand what aspects of incentives will drive the greatest return given the uncertainty and emotional response that is felt by employees during these organizational shifts.

Understanding the psychological response:

The emotional response of individuals to potential negative changes is theorized to go through a process similar to grief.  The Kubler-Ross Reaction to Change[i] cycle shows how employees typically flow through recognized stages when faced with change.

Kubler Ross Change

Initial denial is followed by resistance, then a period of self-doubt and worry, followed by a time of letting go, with acceptance of the change and exploration of options, and finally moving to new commitment and focus.  This is an emotionally charged process that requires time to respond to change.

Organizations need to be able to manage this process and move people through these stages as quickly as possible.  The engagement of the emotional elements of the brain is vital to being able to achieve this. During the high stress, denial and resistance stages, our brains do not process rational arguments as easily or readily as they usually do.  In order to gain a foothold in this emotional cauldron, incentives need to have an emotional hook.  Non-cash incentives achieve this hook through a variety of behavioral economic principles.  First, they provide hedonic luxury escape which is about being able to remove yourself from the current state and imagine yourself with a luxury item or good[ii].  Second, they activate different sectors of the brain associated with visualization (i.e., right hemisphere brain functions) versus the more rational sectors associated with transactions (i.e., money and left hemisphere brain functions)[iii].  Third, non-cash elements do not push employees into a calculative modality in which they equate effort with monetary amounts.  In stressful situations, this calculation is short-changed and often interpreted as “they are trying to bribe me.”  Non-cash awards are evaluated as a separate, non-financial component that is viewed in isolation and not in factors that are associated with other compensation factors.[iv]

Examples:

Many organizations have utilized non-cash incentives in periods of uncertainty and change.  The following are just a few examples of these incentives and the results that they generated.

Y2K Angst

A technology firm out of Des Moines, Iowa was experiencing high levels of turnover and angst with its software programmers because of the uncertainty surrounding Y2K and how their jobs were going to be negatively impacted.   A non-cash incentive program aimed at achieving specific Y2K milestones was implemented across the organization.  AwardperQs (a non-cash point system) were awarded to individuals and teams that achieved specific milestones.   This program provided clear focus and motivation for the software programmers and achieved in excess of 90% of employees engaged/ participating/hitting one or more milestones.

Sales Force Integration

A leading medical technology company was moving from a product-centered sales philosophy to a customer-centric team approach.  This involved a realignment and adjustment to the sales force that created significant uncertainty in the field about their jobs and roles.  A six-month incentive program was developed that rewarded people for sales that required integration of two or more product groups.  A fixed award pool created a sense of urgency and engagement in the incentive.  The client realized a return of more than 300:1 on this program.

Realignment

A pharmaceutical firm was going through a major realignment of territories and product allocation due to a large product soon to come off of patent.  Many sales representatives had new managers, new doctors and new products that they needed to work with.  A short-term team based award was put in place that offered teams the chance to earn from selected merchandise if they were in the top 20% of districts across the nation.  Quota achievement across the division came in above the stretch goal, even with the distraction of realignment.

Other Factors

Obviously there are other factors that influence how quickly organizations move their employees through angst to engagement in situations that are stressful or uncertain.  While this paper does not expand upon those, two key factors that relate to incentives include:

  • Incentives should be short-term to allow for readily available goal progress particularly when dealing with uncertainty.  By providing short-term incentives and tracking to that, individuals will achieve a sense of progression towards goal which increases the perception of certainty in the program.
  • Communication is key.  Incentives cannot be viewed of as a bribe or they will be summarily dismissed.  The tone and narrative of the communication needs to be set up to have the most positive impact and create a separate interaction with the incentives that sets it as different from the cause of the uncertainty.

 


[i] Kübler-Ross, E. (2005) On Grief and Grieving: Finding the Meaning of Grief Through the Five Stages of Loss, Simon & Schuster Ltd.

[ii] Kivetz, R. (2010) Rewards Hierarchy and Hedonic Luxury, presentation at BIW Forum

[iii] Jeffrey, S., (2006) Cash or Hawaii: The benefits of tangible non-monetary incentives, dissertation

[iv] Jeffrey, S., (2008) The benefits of tangible non-monetary incentives, Incentive Research Foundation

How We Are Developing a Reward and Recognition System using the 4-Drive Model

I’m consulting with a 12 Billion dollar sales division of a Fortune 500 company regarding the future of their reward and recognition system.  Without going into much detail, they are trying to take a strategic approach to how they can improve the effectiveness of their reward programs.  As part of this process, we are using the 4-Drive Theory as a model to help guide how we build this system.

As one can imagine, the organization’s current reward and recognition programs rely heavily on the Drive to Acquire & Achieve.  By far, this was the predominant focus for over 90% of the components.  Additionally, our research showed that the current system has a number of legacy programs and other recognition items that are no longer strategically aligned with the organizational mission.

There are a number of ways that a reward system can be developed.  We aligned on developing a system that would tap into all four of the drives and focus on motivating actions on three specific sales behaviors.  With this in mind, we wanted to create a framework that would leverage various reward and recognition components.  That framework is shown below:

Reward and Recognition components

Within each of these four components could be a number of different programs that would be focused on driving one or more of the desired behaviors.  We also identified that while any of the components could activate any of the four motivational drives, that particular drives would be more readily activated by programs within specific components.  We’ve mapped this below:

R&R and the 4-Drives

So while both the incentive compensation and the non-cash components easily activated the drives to acquire and challenge, group trips and other recognition were more likely to tap into the drives to bond and defend.   This provided us with a framework to think about how we could leverage all four drives with various reward and recognition programs.

While this is a high level perspective, it does provide a company with way to think strategically about their reward and recognition system that aligns it with the 4-Drive Model.  We were able to map out specific programs within this framework that provided both a means for effectively driving behavior as well as leveraging all four drives.

To our knowledge, this framework has not been used previously within a large company.  We are very excited about how this is being applied and the impact that it will have.
Please let us know if you have any questions or thoughts by leaving a comment below.   Thanks.

 

 

 

 

 

 

Making Change Happen

Change is hard.  In fact, it is damn hard.  Yet we are being asked (or forced) to change more frequently than ever – in both our personal and business lives.  The world is moving and changing faster than at anytime in our history.  Think about it, five years ago, no one owned an iPhone.

Most people don’t like change.  We fight it.  We avoid it.  We dismiss it and hope that it will just go away

Change often makes us uncomfortable.  It alters how we do things, how we think about things, how we perceive things.  It causes us to change habits that we’ve been perfecting for years and years.  Change often replaces things that we’ve held dear for a long time – with new things that we are uncertain about.

Example: I used to advertise in trade journals.  Now we focus more on social media and the web.  Because I’m not alone in this shift, trade journals are forced to change how they do business or go out of business.  They have to overcome a paradigm shift and explore unknown avenues of generating business.

So what separates those companies that are successful at change and those that are not?

Great leaders

Great leaders understand that change is hard.  They know that just issuing a command from up-top isn’t going to be enough to make change happen down in the trenches.  They understand that they need to work at changing the systems and environment in the workplace to allow change to happen. Great leaders understand that they need to show why change is necessary and important – not just for the stockholders, but for the workers and the customers.  Successful change requires a multifaceted approach that requires fortitude to keep with it and not revert back to old ways of doing things at the first sign of resistance or negative results.

Focus on people

All the companies that I’ve worked with that were successful with change did one thing really well – they focused their energy on their people.  When a large division of a telecommunication firm implemented a major new computer system and software that impacted their sales force, they spent months in communicating, training, and listening to their employees.  They adapted their processes not only because of the new systems capabilities, but to help drive the adaption of the system with their employees.

Communicate, communicate, communicate

Look at any book on organizational change and you will see that communication is vital.  Companies that are successful at change make sure that they over communicate elements about the change to their employees, their suppliers, their customers and often even to the general public.  Successful communication tells a story and starts to impact the culture – not only explaining the “what” and the “how” but the “why” and “impact.”

Make change as easy as possible

If I’m on a diet, I don’t want to be tempted by the ice cream in the freezer so I don’t buy ice cream and keep it in the freezer.  In the same way, companies that do change successfully take away those elements that could entice workers to not change.  They focus on getting the right people working together with the right tools and with the right incentives.  Too often I’ve seen change initiatives that do a great job of being led by management, having training and communications reinforce the key messages, and then fall flat because the recognition or incentive system hasn’t been changed or wasn’t changed enough.  For instance, a large company was trying to change the sales culture to one of great customer service and they even added in a metric to their incentive plan around customer satisfaction.  However, the sales team quickly realized that sales results still drove the majority of the incentive plan and trumped the customer measure hands down.  Needless to say, the focus on customer service was more lip service than getting that next sale.

Let me know your thoughts and your experiences with change – good and bad…

Are you spending more on office cleaning than staff motivation?

There was a recent blog from HRZone UK that claimed, “Blog: Most employers spend more on office cleaning than staff motivation.”  I cannot vouch for the accuracy of this statement or info in the article.

That being said, accuracy is not the point.  The point is, you get what you pay for – right?  So what is it that your organization is paying for?

How is your company spending its money?  Is it on it’s people or on systems?  Is it on sales or is it on customer support?  R&D or discounts to suppliers?  The money often points to where the focus is for your company?

Two things that I often do when working with companies trying to improve their employee motivation is 1) interview key leaders to understand what the key drivers of the business are and 2) conduct a total rewards audit.   I use step one of this process to get at the underlying drivers of the business.  This often isn’t the first thing that comes out of leaders mouths.  In fact, it usually requires me to probe with them to really get at the root cause.  This understanding of the key drivers is vital to being able to motivate the appropriate behaviors and performance.  What we find in step two of this process is that the company’s Total Rewards are NOT in alignment with the key drivers.  In other words, companies are often spending their money on things that are not key to driving their success (similar to the clean office analogy in the HR Zone article).

This is not a good way to spend money.

Hopefully your company isn’t doing this.  But a simple way of finding out is to look at where you are spending money and then seeing if that aligns with the key drivers of the business.  If it aligns, you are doing well, if not, you have a problem.

Here is a link to the HR Zone article if you care to give it a glance: http://www.hrzone.co.uk/topic/managing-people/blog-most-employers-spend-more-office-cleaning-staff-motivation/119615

Have a great day!

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