Why Do So Many Incentive Programs Fail?

Most organizations don’t understand what must be done to make incentive programs successful. In 2003, a groundbreaking study titled “Incentives, Motivation and Workplace Performance: Research & Best Practices,” conducted by researchers for the International Society of Performance Improvement, proved that incentive programs can boost performance by 25 to 44 percent, “but only if conducted in ways that address all issues related to performance and human motivation.” The study found that most organizations lack the knowledge or will to create properly constructed programs.

In our opinion, the top three reasons that so many incentive programs fail are:

1. Most companies don’t address all issues related to performance and human motivation

2. Most companies lack the knowledge or will to create properly constructed programs

3. There is no pre-program evaluation that leads to program-objective setting, ongoing measurement, and post-program evaluation.

The third point, program evaluation and ROI, has been discussed often. We will address the subject of properly structuring programs in the future, but now we discuss the issues related to performance and human motivation.

The Scientific Underpinnings of Incentive Programs
Most incentive programs are designed to produce behavior change. They entice, encourage, or motivate individuals to act in certain manners.

But what drives the success of an incentive program? The notion of providing incentives or rewards for desired behavior is a fundamental tenet of operant conditioning paradigms. Operant conditioning is a process of behavior modification in which the likelihood of a specific behavior is increased or decreased through positive or negative reinforcement each time the behavior is exhibited, so that subjects come to associate the pleasure or displeasure of the reinforcement with the behavior.

Operant conditioning is the single-most-applied method for influencing behavior change. Because of its synthesis into everyday practice, it is easy to forget that many of the processes we take to be “common sense” are, in fact, based on the principles of operant conditioning. When we pay individuals for a completed job, when we offer our children verbal praise, when we give our pets food for performing a particular behavior, we are, in fact, using the principles of operant conditioning. This, however, creates a problem.

Often, the complexity and rigor of operant conditioning principles are ignored when behavior modification is applied in everyday life. Similarly, operant conditioning principles are rarely utilized in incentive programs. While the majority of incentive programs accurately employ “reinforcements” for a desired behavior, they often don’t utilize any of the critical components of operant conditioning for behavior change success.

Operant conditioning paradigms are founded on very specific, granular analyses of behavior. Providing individuals rewards for a series of behaviors (i.e., selling specific products, making a certain number of calls a day, reducing expenses, working safely, etc) does not follow the basic tenets of operant conditioning.

While volumes of research have documented the nuances of the operant conditioning paradigm, there are basic tenets of the theory that are too often not considered in incentive programs. Some of them are summarized below:

1. Reinforcement must be applied to specific behaviors in order to maximize the likelihood of behavior change. Break your objectives down to their simplest components whenever possible

2. Reinforcement of behaviors needs to occur close in time to the performance of the behavior. The more delay between the performance of the behavior and the delivery of the reinforcer, the less powerful the reinforcer becomes

3. The frequency or schedule of the reinforcement is a critical component of behavior change success. Acquisition of new behaviors requires consistent and frequent reformatting. As the behavior becomes ingrained, the schedule of reinforcement can be faded out

4. The more complex and challenging the behavior, the more potent the reinforcer must be

5. Reinforcers must be deemed meaningful by the participants. If reinforcers are not seen as meaningful, they will have no impact on the individuals

6. There are differences between “primary” and “secondary” reinforcers. Primary reinforcers have innate meaning to individuals (i.e., food, water, and air, plus certain verbal and social reinforcement). Secondary reinforcers are reinforcers whose value is determined by their connection to primary reinforcers (i.e., money, points, gift cards).

Achieving a desired behavior outcome requires the application of operant conditioning principles in a systematic manner. When you cut corners in your planning and implementation by eliminating or not placing emphasis on these principles, you are only providing the opportunity for your program to fail. It is not a guarantee, but it certainly increases the odds of failure.

These basic principles have been employed for decades to achieve a broad variety of behavior changes. If you are to maximize the potential of your incentive programs, you need to apply these principles. Implementing an incentive program capable of influencing the spectrum of behaviors to achieve an objective is a challenging but necessary task if we are to impact and improve performance.

Behavioral science provides the empirical foundation for the design of any incentive program and should be utilized whenever programs are developed. In future columns, we will discuss the additional considerations that must be accounted for along with the empirical foundation of operant conditioning.

With over 35 years in the incentive industry, Ley Borlo consults with clients, comparing price, choice, and value of the various award systems that exist in the industry. He is a partner at Incentives Inc., a pioneer in the use of gift cards as incentive awards. He developed www.awardemployees.com to display the many gift card reward solutions provided by Incentives Inc., as well as many articles on various subjects about the incentive industry. He can be reached at leyb@incentivesinc.com.

Dr. Joshua C. Klapow is a clinical psychologist and associate professor in the Department of Health Care Organization at the University of Alabama at Birmingham’s School of Public Health. He is also the chief strategy officer and chief behavioral scientist for ChipRewards Inc., www.chiprewards.com, a consumer health incentive company. He serves as a chronic conditions and behavioral science consultant for a number of organizations, including the World Health Organization. He is also the author of Living SMART: 5 Essential Skills to Change Your Health Habits Forever, a consumer book on lifestyle change. He can be reached at josh.klapow@chiprewards.com.


— Nielsen Business Media