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Saturday, July 12, 2014

Money doesn’t always give the best incentive 07-13

Money doesn’t always give the best incentive

A Bike to Work participant parks a bicycle at City Hall during an annual ride and rally on May 26, 2014.
A Bike to Work participant parks a bicycle at City Hall during an annual ride and rally on May 26, 2014.
Many employers encourage their employees to give to charity or fundraise for a good cause. Growing Toronto-based tech consulting company Bursting Silver goes the extra mile and pays them to do it.
Founder Al Povoledo offers each of his staffers $750 each year, tax-free, to give to the charity of his or her choice. The only proviso? Employees can’t just donate. They have to get involved in some way, too — organize an event, run a marathon or work in a soup kitchen.
“I’ll write a cheque to anyone they want me to,” says Povoledo. “But they have to be involved in a part of it. If they’re supporting a cause to cure AIDS, you do the AIDS walk or run. You participate in the event. There’s a bit of effort there.”
The promise of a donation seems to work. Almost every one of Bursting Silver’s roughly 20 staffers has taken him up on the offer. Project manager and consultant Jennifer Hendriks is training and raising an ambitious $15,000 for the 600-kilometre Friends for Life Bike Rally on July 27 for the Toronto People With AIDS Foundation.
But is it really the $750 that’s motivating her? For behavioural scientists and ethicists, that’s the million-dollar question.
“I’d like to say it’s the money that makes it, but it’s not,” says Hendriks, who says it her job’s schedule flexibility, as well as its encouraging environment, that really makes it possible for her to attempt such a feat.
If the company merely gave its staffers flexible schedules and no $750, would nearly all of them be volunteering so actively?
Since the days the Red Cross first began giving people cookies when they donated blood, rewards have long been used to motivate people to do good. Today, as a way of dealing with problems as diverse as traffic congestion and obesity, governments are increasingly experimenting with incentives to get people to make difficult but beneficial changes to lifestyle habits — such as exercising, eating healthier and even driving less.
The stakes are high. According to one influential figure in 2007, behavioural causes are estimated to account for nearly 40 per cent of deaths in the U.S.
“Everyone at some level wants to be healthy” or engage in activities they see as positive, says Kevin Volpp, director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania, which was founded to study ways to motivate people to make better decisions, especially around health. “What’s competing for their attention is that engaging in healthy behaviour requires effort and the payoff is off in the future.”
Earlier in June, the French government started a pilot project that pays employees 25 euro cents per kilometre to ride their bicycles to work in a bid to reduce traffic congestion. Twenty companies have already volunteered to take part in the program. Bursting Silver pays its staffers $1 per kilometer to bike to meetings, rather than the 50 cents per kilometre they would normally give out as travel compensation. About one-third of employees take part in the program, says Povoledo.
Yet when asked if that extra 50 cents is what’s motivating them, he shakes his head.
“To me the payment doesn’t mean anything,” says Povoledo. “What this is doing is it creates a different culture in our company.” The compensation acts as a signal to employees, clients and competitors that their company values the environment and the community. While the money may be the carrot, it’s the firm’s encouraging atmosphere that allows those who try biking to work to actually stick with it.
Whether paying people to do something good — or good for them — really works is a topic of increasing academic debate. The growth of behavioural economics (the study of the emotional and psychological factors in economic decisions) has led researchers to look more closely at why people make the choices they do. Those who believe decision-making can be reliably moulded by incentives are known, rather optimistically, as “choice architects.”
A 2009 study authored by Volpp and other colleagues at the Center and sponsored by the Center for Disease Control showed that a cash incentive could be used to help people stop smoking. The program offered one group of General Electric employees a package of incentives to quit valued at $750, as well as information on local quit-smoking programs, while offering a second group the information only. It found that the first group quit smoking at three times the rate of the group that only got information.
There was a twist, though. When asked if the money had motivated them to quit smoking, employees denied that it had been a deciding factor.
“There is a tendency of people not wanting to attribute change to the incentive,” says Volpp. “People want to feel good about taking care of themselves. ‘I did it because I was getting paid to do it’ doesn’t have the same ring to it.”
The desire to want to be seen as doing the right thing for the “right” reasons frustrates efforts to figure out why people do anything.
Research has even shown that relying too much on money to motivate people’s behaviour can backfire if it messes with people’s natural ethical instincts. An experiment that paid women to donate blood actually reduced the number of donors by half. Allowing them to give their payment back to charity brought donors back, according to a 2009 essay warning against relying on economic incentives in the Harvard Business Review.
Volpp says that monetary incentives shouldn’t be used to change behaviour without a deeper shift in the culture of a company or a society toward living healthier or volunteering. He thinks that provides a clue to why Bursting Silver’s programs work. The money is simply a very tangible signal of the company’s values, which also mean Jennifer Hendriks gets a flexible work schedule that makes it easy to fit in her training and fundraising.
“There are very powerful interactions between the underlying culture within an organization and what people do,” he says. “So the decision to offer money is a manifestation of the fact the company feels it’s important to be physically active and there’s important signaling going on.”

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