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Why Negative Incentives Work

Why Negative Incentives Work

September 14, 2018

Keeping your team motivated and happy is the key to a successful workforce, but what exactly is the best way to do that? With a diverse team, motivation can be difficult to encourage with a one-fits-all approach. These days, it’s common for business and team leaders to gravitate towards tactics that involve the use of positive incentives; the most common of which being monetary bonuses, usually at the end of the fiscal year.

But what if your particular team isn’t responding well to such an incentive?

Some research, like this study conducted by Kelly Goldsmith of Vanderbilt University and Ravi Dhar of Yale University, make the assertion that perhaps the key to truly motivating a team lies in negative incentives.

Sound counter intuitive? It could be, but it also just might be the golden ticket to the efficient, well-oiled workforce you’re looking for.

What Are Negative Incentives?

While positive incentives encourage productivity due to inherent desire to obtain something, negative incentives encourage productivity by making the person not want a specific outcome.

For example, those whose job it is to secure clients, say perhaps for a law firm, might say, “If you do well this year, you could get a bonus or promotion.” Now, that might be enough to get your employees to put a little bit more effort in, but what if you said, “Your bonus this year will be $10,000. If you secure 3000 billable hours, you’ll take home every cent.” You might be more inclined to start working towards those clients at the start of the year, increasing the potential to not only meet the expectation but exceed it.

Here’s another example.

Think about going for a drive. When you come across a construction zone and the speed significantly lowers, do you slow down, or do you speed up? Most people are inclined to slow down. It’s not because they’re always perfect drivers with a love of flawless track records, it’s because they know that if they don’t slow down and they get caught by police they risk steep penalties and fines; they might even lose their license if they have prior offenses and who wants that kind of rap sheet?

How Do They Work To Motivate In The Workplace?

Ultimately, the purpose of negative incentives is to correct undesirable behavior and turn it into effective results that’ll positively impact the entire organization for the better. This could be anything from performance write-ups, suspensions, to demotions, and if it comes to it, firing.

In these situations the risk of taking something away, even something intangible, tends to take a greater hit to one’s ego than positive incentives which tend to act more as a soft pat on the back, thus lighting a fire and inspiring the employee to prove themselves and increase performance.

Which Is Better? Positive Or Negative Incentives?

While there is no guaranteed science as to which incentive method will work best for your team, studies like those references above make a great case for leaving your options open and trying multiple motivation methods.

Somebody who isn’t feeling challenged in their role, for example, might not be as inspired to kick up their performance when faced with a possible demotion, but they might be encouraged when given a task with more opportunity for them to improve their personal skills or obtain a new certification. Likewise, somebody feeling content in their role might take a potential suspension or fine more seriously.

It’s important to remember every member of your team will have their own idea of they consider motivating, but if the research has anything to say for it, maybe try your luck at implementing a negative incentive first.

You can get started with Spinify and try building out these competitions for your team today.

Jacob Kinsman

Business Operations Manager, Harcourts Real Estate 

If your team works from multiple locations. Any of your team work from home, if you’re looking for ways to reward success and to hold a mirror up to salespeople business, get Spinify.

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Put those insights into practice.

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