Repost: We are NOT rational beings so why do we try to make rational incentive programs?

Take the blndfolds offTake off our rational blindfolds…

Dan Airely, Richard Thaley, Cass Sunstein, Daniel Kahneman, Ran Kivitz, and many more psychology and behavioral economics  researchers have shown that while we like to think of ourselves as rational, thinking human beings who are out to optimize our well being, we aren’t.

In fact, we are very far from it.

Sharon Begley at Newsweek wrote this interesting blog “The Limits of Reason” in it, she states, “But as psychologists have been documenting since the 1960s, humans are really, really bad at reasoning. It’s not just that we follow our emotions so often, in contexts from voting to ethics. No, even when we intend to deploy the full force of our rational faculties, we are often as ineffectual as eunuchs at an orgy.”

We see this all the time.  I wrote about it in my earlier post from today “5 Lessons from the Maze.”  We tend to act and behave in very non-rational ways.  There are lots of irrational types of behavior and thinking and lots of theory’s about them (i.e., Loss Aversion, Status Quo Bias, Gambler’s Fallacy, Hedonistic Bias, Anchoring, Reciprocity, Inequity Aversion, etc…).

Here is what is interesting – we tend to still design our incentive programs and our motivational strategies based on believing that people act in a rational manner. We create programs that have 10 different ways to earn, with multipliers, qualifiers, and ratchet effects.  We create programs with multiple components and factors that we think will drive specific behaviors and elicit particular performance results.  We believe we know what people want and use only extrinsic rewards to drive our results.

Ouch!

Paul Hebert at Incentintel also wrote an excellent piece about the debate on “cash vs non-cash” (this was inspired by an article by Globoforce – again, excellent article) – which again points out to the rational fallacy that we have (i.e., people say they prefer cash to non-cash, so therefore we think that they will be more motivated by it – which is untrue as Paul points out).

What we need is programs and strategies that take into account our irrational side.

We need to engage the heart, not just the mind.

I’ve ranted about Dan Pink before (here) – but the one thing that I think he highlights is that we are motivated by more than just money and rewards.  The 4-Drive Model (see here) also shows how we are motivated by more than just rewards.

This is what we need.

We need to think about incentives differently.

We need to put them into a larger context and one that doesn’t solely rely on the rational processes of the brain to get us motivated.  We need to consider human nature and the innate drives that pull us in ways that are often irrational (or at least appear to be at first glance).   Our work needs to make sure that we look deeper and harder at our incentives and focus on how they are interpreted and used by our participants.

The 4-Drive model shows that our programs need to be focused on a more holistic approach – one that might not seem rational at first.  We need to build programs that help increase the drive to Bond & Belong, the Drive to Comprehend & Challenge, the Drive to Define & Defend.  We need to look past the extrinsic levers that we have and look at the intrinsic motivators.  We need to nudge people to change through the use of powerful communications and design.

Our incentive programs need to be designed using research and theories to to get people to empirically behave differently and not just programs designed because that’s what we think will work.

I’d love to hear your thoughts?  Leave a comment.

NOTE: this was originally posted in August of 2010 and has been one of our most viewed posts – we thought we would repost it as it is still relevant today.

One thought on “Repost: We are NOT rational beings so why do we try to make rational incentive programs?

  1. Pingback: Imaginary monsters are still scary | What Motivates You?

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