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Incentive management is the art of creating, controlling, and awarding incentives for a desired outcome. Incentives, as defined by this article, are things that encourage someone to do something. Incentives can influence behavior change from either direction; both positive and negative.
This article is about creating and managing incentives that are effective at influencing behavior in a favorable manner.
Map the Individual’s or Group’s Needs, Interests, and Fears
Notwithstanding whether you find yourself in a professional or social context, each setting in which people interact with one another is governed by the interests of each person within that setting. There is seldom an actor in any social or professional situation whose behavior does not operate by certain interests, needs, or fears.
To map the needs, interests, and fears of the individuals or groups involved in a situation, you need to understand their motivations, preferences, and constraints. You can use various methods to gather this information, such as surveys, interviews, observations, or experiments. The more you know about what drives people’s behavior, the better you can design incentives that align with their goals and values.
One way to categorize the needs, interests, and fears of people is to use the framework of intrinsic and extrinsic motivation. Intrinsic motivation refers to the internal satisfaction or enjoyment that people derive from doing something. Extrinsic motivation refers to the external rewards or punishments that people receive for doing something. Both types of motivation can influence behavior change, but they have different effects on different people and contexts.
In general, intrinsic motivation is more effective and sustainable for behavior change than extrinsic motivation. This is because intrinsic motivation is based on personal values and interests, which are less likely to change over time or vary across situations. Extrinsic motivation, on the other hand, can be easily undermined by factors such as habituation. Habituation occurs when people get used to a certain level of reward or punishment and lose interest in it.
Therefore, when designing incentives for behavior change, you should try to enhance intrinsic motivation as much as possible. You can do this by appealing to people’s sense of autonomy, competence, relatedness, purpose, or identity. For example, you can give people more choice and control over their actions, provide them with feedback and recognition for their progress, connect them with others who share their goals or values, explain how their actions contribute to a larger cause or mission, or highlight how their actions reflect their self-image or social norms.
However, intrinsic motivation alone may not be enough to overcome some barriers or challenges to behavior change. In some cases, you may need to supplement it with extrinsic incentives that are carefully designed and implemented.
Connect Their Needs, Interests, and Fears to Incentives Under Your Control
Once you’ve mapped the individual’s needs, interests, and fears, it comes time to create or utilize incentives that are under your control in the context at hand.
Since you have limited control over incentives in the particular domain you seek to influence behavior in, you’ll need to creatively connect the needs of the individuals you seek to influence with the incentives you’re able to provide.
Some examples of incentives that you may be able to provide are:
- Recognition: This can be in the form of praise, feedback, awards, or public acknowledgment. Recognition can appeal to the need for esteem, belonging, or achievement.
- Rewards: This can be in the form of money, gifts, bonuses, or discounts. Rewards can appeal to the need for security, comfort, or pleasure.
- Opportunities: This can be in the form of training, education, promotion, or access. Opportunities can appeal to the need for growth, learning, or advancement.
- Consequences: This can be in the form of penalties, fines, sanctions, or restrictions. Consequences can appeal to the fear of loss, harm, or failure.
The key to connecting these incentives to the individual’s needs, interests, and fears is to make them relevant, meaningful, and proportional. You need to understand what motivates the individual and what they value most. You also need to ensure that the incentives are aligned with the desired behavior and the context.
For example, if you want to encourage your employees to adopt a new software system, you could use a combination of incentives such as:
- Recognition: You could praise them for their efforts, provide constructive feedback on their progress, and showcase their achievements to their peers and managers.
- Rewards: You could offer them a monetary bonus for completing the training, a gift card for reaching a certain level of proficiency, or a discount on their subscription fee for using the system regularly.
- Opportunities: You could provide them with access to advanced features or functions of the system, enroll them in a certification program or a mentorship scheme, or give them a chance to lead a project or a team using the system.
- Consequences: You could impose a deadline for completing the training, charge them a fee for not using the system regularly, or limit their access to other resources or systems if they fail to comply.
By connecting these incentives to their needs (such as security, esteem, or growth), interests (such as money, learning, or leadership), and fears (such as loss, harm, or failure), you can increase the likelihood of influencing their behavior in a favorable manner.
Maintain Control and Scarcity of Incentives
A major key to triggering desired behavior and sustaining it into the long term is to ensure that the incentives awarded for that behavior are owned and controlled by you.
If you have control over the incentives, you can decide when, how, and to whom they are given. This allows you to create a sense of anticipation and uncertainty among the recipients, which can increase their motivation and engagement. You can also adjust the incentives according to the situation and the feedback you receive from the recipients.
Scarcity is another factor that can enhance the effectiveness of incentives. Scarcity means that the incentives are limited in quantity, availability, or duration. Scarcity creates a sense of urgency and exclusivity among the recipients, which can make them value the incentives more and work harder to obtain them. Scarcity also prevents the recipients from becoming saturated or bored with the incentives.
One example of maintaining control and scarcity of incentives is the use of gamification in online platforms. Gamification is the application of game elements and mechanics to non-game contexts, such as education, health, or business. Gamification often involves rewarding users with points, badges, levels, or other virtual rewards for completing tasks or achieving goals. These rewards are controlled by the platform owners and are scarce in relation to the difficulty or rarity of the tasks or goals. Gamification can motivate users to engage more with the platform and improve their performance or behavior.