Motivation and Incentives →
- 13 Feb 2013
- Research & Ideas
5 Weight Loss Tips From Behavioral Economists
Behavioral economists study what motivates people to buy, save, donate, and any other number of actions that build society. The following studies reveal proven methods of encouraging healthy eating and exercise. Open for comment; 0 Comments.
- 21 Jan 2013
- Research & Ideas
Altruistic Capital: Harnessing Your Employees’ Intrinsic Goodwill
Everyone comes to the table with some amount of "altruistic capital," a stock of intrinsic desire to serve, says professor Nava Ashraf. Her research includes a study of what best motivates hairdressers in Zambia to provide HIV/AIDS education in their salons. Closed for comment; 0 Comments.
- 28 Nov 2012
- What Do You Think?
Should Pay-for-Performance Compensation be Replaced?
Summing up: In spite of its naysayers, pay for performance compensation still makes sense to most of us, according to those responding to Jim Heskett's column on the subject. But there is a difference of opinion of about when and how it works and how it should be structured. Closed for comment; 0 Comments.
- 27 Nov 2012
- Working Paper Summaries
No Margin, No Mission? A Field Experiment on Incentives for Pro-Social Tasks
Organizations from large corporations to NGOs use a range of nonfinancial performance rewards to motivate their employees, and these rewards are highly valued. While theory has suggested mechanisms through which nonfinancial incentives can elicit employee effort, evidence on the mechanisms, and on their effectiveness relative to financial incentives, remains scarce. This paper helps to fill this gap by providing evidence from a collaboration with a public health organization based in Lusaka, Zambia, that recruits and trains hairdressers and barbers to sell condoms in their shops. This setting is representative of many health delivery programs in developing countries where embedded community agents are called upon to deliver services and products, but finding an effective way to motivate them remains a significant challenge. Findings show the effectiveness of financial and nonfinancial rewards for increasing sales of condoms. Agents who are offered nonfinancial rewards ("stars" in this setting) exert more effort than either those offered financial margins or those offered volunteer contracts. Key concepts include: Nonfinancial rewards can motivate agents in settings where there are limits to the use of financial incentives. Nonfinancial rewards elicit effort by leveraging the agents' pro-social motivation and by facilitating social comparisons among agents. Closed for comment; 0 Comments.
- 17 Sep 2012
- Research & Ideas
Blue Skies, Distractions Arise: How Weather Affects Productivity
New studies show that workers are more productive on rainy days than on sunny ones. Does your office take advantage? Research by Francesca Gino and colleagues. Closed for comment; 0 Comments.
- 23 Aug 2012
- Working Paper Summaries
Field Evidence on Individual Behavior & Performance in Rank-Order Tournaments
Contests abound in everything from amateur and professional sports to arts, architecture, manual labor, and engineering. Just as large-scale online contest platforms that provide ongoing tournament-based work and compensation have emerged, large industrial companies increasingly use them as a complement to in-house research and development. What difference does increased competition make to individual participants? This paper analyzes data from algorithmic programming contests to shed light on the mechanisms that underlie changes in performance in reaction to increased competition. Three mechanisms may account for a performance decline: reduction in effort, increased risk taking, and deterioration in cognitive processing. The study also shows how the ability of competitors affects their reactions to increased competition. Overall, results suggest that a better understanding of behavioral responses in contests can aid both public policy and contest designers. Key concepts include: The authors analyze contest data on individual effort, risk taking, and cognitive errors. On average, competitors react negatively to an increase in the total number of competitors, and react more negatively to an increase in the number of superstars than non-superstars. These negative effects are strongest in a particular subgroup of competitors: those who are highly skilled, but whose abilities put them near to the top rather than at the top in terms of ability. For competitors who are near-to-the-top in terms of ability, there is no evidence that the decline in performance outcomes stems from reduced effort or increased risk taking. Instead, errors in logic lead to a decline in performance. A small group of very high ability competitors (excluding superstars) reacts positively to increased competition from superstars. Very high ability competitors show some evidence of increased effort and no increase in errors of logic, consistent with both economic and psychological explanations. Closed for comment; 0 Comments.
- 13 Aug 2012
- Research & Ideas
When Good Incentives Lead to Bad Decisions
New research by Associate Professor Shawn A. Cole, Martin Kanz, and Leora Klapper explores how various compensation incentives affect lending decisions among bank loan officers. They find that incentives have the power to change not only how we make decisions, but how we perceive reality. Closed for comment; 0 Comments.
- 04 Jun 2012
- Research & Ideas
The Business of Life
Scholarly economic theory applies to more than just business. The same causal mechanisms that drive big corporations to success can be just as effective in driving our personal lives, says Professor Clayton M. Christensen. Closed for comment; 0 Comments.
- 30 Jan 2012
- Research & Ideas
Measuring the Efficacy of the World’s Managers
Over the past seven years, Harvard Business School's Raffaella Sadun and a team of researchers have interviewed managers at some 10,000 organizations in 20 countries. The goal: to determine how and why management practices differ vastly in style and quality not only across nations, but also across various organizations and industries. Closed for comment; 0 Comments.
- 31 Oct 2011
- Research & Ideas
The Most Powerful Workplace Motivator
When evaluating compensation issues, economists often assume that both an employer and an employee make rational, albeit self-interested choices while working toward a goal. The problem, says Assistant Professor Ian Larkin, is that the most powerful workplace motivator is our natural tendency to measure our own performance against the performance of others. Open for comment; 0 Comments.
- 06 Sep 2011
- Research & Ideas
How Small Wins Unleash Creativity
In their new book, The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work, authors Teresa M. Amabile and Steven J. Kramer discuss how even seemingly small steps forward on a project can make huge differences in employees' emotional and intellectual well-being. Amabile talks about the main findings of the book. Plus: book excerpt. Key concepts include: Of all the factors that induce creativity, productivity, collegiality, and commitment among employees, the single most important one is a sense of making progress on meaningful work. Seemingly small signs of progress will induce huge positive effects on employees' psyches. On the other hand, seemingly small setbacks will induce huge negative effects. The catalysts that induce progress include setting clear goals; allowing autonomy; providing resources; giving enough time-but not too much; offering help with the work; learning from both problems and successes; and allowing ideas to flow. Closed for comment; 0 Comments.
- 22 Aug 2011
- Research & Ideas
Getting to Eureka!: How Companies Can Promote Creativity
As global competition intensifies, it's more important than ever that companies figure out how to innovate if they are going to maintain their edge, or maintain their existence at all. Six Harvard Business School faculty share insights on the best ways to develop creative workers. Closed for comment; 0 Comments.
- 27 Jun 2011
- Research & Ideas
Recovering from the Need to Achieve
In his new book, Flying without a Net: Turn Fear of Change into Fuel for Success, HBS professor Thomas J. DeLong explores the world of "high-need-for-achievement professionals" or HNAPs—those for whom the constant, insatiable need to achieve can lead to anxiety and dysfunction. Plus: book excerpt. Key concepts include: Instead of happiness or well-being, high-need-for-achievement professionals seek "relief in the accomplishment of tasks." This creates a vicious cycle marked by a lack of a real sense of purpose. Four characteristics define an HNAP: comparing, busyness, worrying, and blaming. DeLong calls for HNAP readers to take the following steps toward recovery: stop and reflect with self-awareness, let go of the past, create a vision or specific goal with an agenda, seek support through mentors and a network, don't blink (or fall back on old behaviors), and purposefully expose themselves to vulnerability. Closed for comment; 0 Comments.
- 22 Jun 2011
- Sharpening Your Skills
Sharpening Your Skills: Motivation
Can employers motivate employees to work more creatively, ethically, or productively? Or does that power reside solely within the individual? Recent research at Harvard Business School suggests workers can be motivated by their environment. Closed for comment; 0 Comments.
- 06 Jun 2011
- Research & Ideas
Why Leaders Lose Their Way
Bill George discusses how powerful people lose their moral bearings. To stay grounded executives must prepare themselves to confront enormous complexities and pressures. Open for comment; 0 Comments.
- 03 Jun 2011
- Working Paper Summaries
Inducement Prizes and Innovation
Throughout recent history, many foundations have tried to induce innovation through competition, offering massive cash prizes to inventors who meet the challenge of creating world-changing inventions. For instance, in 1996 the X Prize Foundation offered $10 million to the first non-government organization to launch a reusable, suborbital manned spacecraft twice within two weeks. The prize was awarded in 2004 to a project financed by Microsoft co-founder Paul Allen. The problem is that inventors cannot win these competitions if they cannot come up with funding to realize their inventions, and research and development costs often exceed the amount of the cash prize. So, does the incentive of an eventual prize really induce innovation? In this paper, Liam Brunt, Josh Lerner, and Tom Nicholas look to answer that question, using a data set of prizes awarded by the Royal Agricultural Society of England (RASE) between 1839 and 1939. Key concepts include: The RASE competitions led to an uptick in the number of new patents awarded in any given year, indicating that offering prizes is good for overall innovation. However, based on the number of contest entries in the hundred-year period, the researchers find that inventors seemed more motivated by the possibility of winning medals than in winning cash prizes. The findings offer guidance for current invention competitions. While the biggest competitions presuppose that inventors are fueled by the possibility of cash prizes, the evidence suggests that they are more fueled by the possibility of publicity--and the idea that winning will make it easier to market the prize-winning product. Closed for comment; 0 Comments.
- 10 May 2011
- Working Paper Summaries
The Impact of Forward-Looking Metrics on Employee Decision Making
In marketing, the use of the customer lifetime value (CLV) metric encourages a focus on long-term customer relationships over short-term sales. This paper examines a situation in which a European bank introduced CLV data to its customer-facing employees, while still maintaining the incentives linked to short-term profitability; the goal was to discover whether and how these employees would modify their mortgage sales decisions. Research was conducted by Pablo Casas-Arce of Universitat Pompeu Fabra, and F. Asís Martínez-Jerez and V.G. Narayanan of Harvard Business School. Key concepts include: Having access to the CLV information caused bank managers to shift their focus toward more profitable client segments. However, the implementation of the CLV metric had no effect on how branch managers decided to price mortgages. Rather, they seemed to increase sales to their most valuable customers just by improving customer service. The availability of the CLV information also did not affect the bank managers' risk-taking tendencies—i.e., they did not relax their standards just to please their most valuable customers. The availability of CLV information led bank managers to cross-sell more products to their mortgage customers by targeting segments that bought a higher average number of products, but there was little effect on the average cross-selling to customers from any given segment. Closed for comment; 0 Comments.
- 04 May 2011
- Research & Ideas
Is Web Surfing Distracting Your Workers?
If you think that banning web surfing at work will improve your employees' productivity, think again. In new research on the effects of temptation, HBS research fellow Marco Piovesan and colleagues found that the act of resisting temptation distracted subjects enough that their work performance actually suffered. Closed for comment; 0 Comments.
- 02 May 2011
- Research & Ideas
Casino Payoff: Hands-Off Management Works Best
Micromanagers beware: Research of casino hosts by Harvard Business School's Dennis Campbell and Francisco de Asís Martinez-Jerez and Rice's Marc Epstein makes the case that hands-off management can work to improve employee learning and decision making. Closed for comment; 0 Comments.
The Dirty Laundry of Employee Award Programs: Evidence from the Field
Many scholars and practitioners in human resource management have recently argued that awards and other forms of on-the-job recognition provide a "free" way to motivate employees. But are there unintended, negative effects of such awards? In this paper, the authors simultaneously examine the costs and benefits of an attendance award program that was implemented in an industrial laundry plant. The award used in the study was effective in that it reduced the average rate of tardiness among employees. However, it also led to a host of potential spillover effects that the plant manager readily admits were not considered when designing the program, and that reduced overall plant productivity. Overall, findings demonstrate that an award program that appears to be effective may also induce unintended consequences severely reducing the net value of the program. These results highlight the impact such a program can have on the overall performance of the firm and suggest caution when designing and implementing such programs. Key concepts include: Even simple awards programs can have much broader and complex implications for employee behavior. In the study, two highly valued employee groups - the most productive workers and the most consistently punctual workers - suffered a 6-8% decrease in productivity after the award was instituted. This finding is remarkable because it suggests that awards for one type of behavior have the potential to "crowd out" positive behavior in a completely different realm. This research suggests that non-monetary but extrinsic rewards such as corporate awards act more like monetary rewards than they do intrinsic motivators such as love for the job or empowerment through autonomy. Award programs with a low likelihood of winning may be ineffective because employees do not habituate good behavior, and instead lead to a highly strategic response from employees. Closed for comment; 0 Comments.