The concept of “carrots and sticks” has existed since the beginning of civilization. The questions that flummox business leaders are:
1. When should we use carrots (aka rewards or incentives) and when should we use sticks to improve employee performance?
2. What is the optimal reward or incentive that nudges employees to adopt desired behavior?
3. How can businesses get continued gains from employee loyalty programs?
Let us revisit Roger’s Bell Curve of adoption. When confronted with new products, ideas, technologies, etc., some people adopt very quickly as “innovators,” others follow as “early-adopters,” others are “middle-adopters,” and the rest are “laggards.” As shown in the diagram below, the distribution of “types” tends to follow a bell curve. In addition, behaviorists have demonstrated that individuals tend to suffer from status quo bias when making decisions—i.e., they prefer the status quo and move from one segment of adoption to another only after calculating the effort to change (also known as mental accounting) and assessing the reward for change (also known as anchoring). Mechanisms need to be developed to “nudge” individuals into overcoming these decision-making frictions. These mechanisms include Gamification.
As we all know, rewards—ranging from employee-of-the-month parking spots to Pink Cadillacs (Mary Kay) to company-paid trips to Hawaii to bonuses—incentivize top performers (i.e. innovators and early-adopters) to go for the win. When companies introduce pure Game Mechanics gamification (digital or non-digital) to employee settings, top performers continue to win. Innovators and early-adopters embrace pure Game Mechanics because it introduces “fun” into their initial risk-taking behavior.
In short, the use of pure Game Mechanics as a nudging mechanism can suffer from a “top performers’ curse,” in that it simply incentivizes these employees to behave the same way they would have behaved without the “carrot.”
What carrots will change the behavior of middle-adopters? Why do real-work, data based, points-badges-and-leaderboard (PBL) mechanisms fail when it comes to employee engagement? I attribute this failure to a lack of understanding of the Rogers’ Bell Curve when designing Gamification nudging mechanisms.
When designing nudging mechanisms, the key questions to ask are:
1. What behaviors do you (the employer) want to see from the employees?
2. What workarounds (or recidivism to non-desirable behaviors) need to be prevented?
If the employer has good answers to these questions, he/she can create mechanisms that nudge middle-adopters to the desired behaviors. In short, employees get the carrot and the employer gets the win.
Serious Games allow middle-adopters to go through the “unlearn and relearn” cycle faster. This, in turn, enables them to trust the change and adopt faster. This is why Serious Games-based mechanisms work so well with respect to employee engagement. An interesting example is provided by Persuasive Games iconoclast Ian Bogost: Cold Stone Creamery required all new hires to practice their ice cream scooping technique with a game simulator before serving customers. This produced faster on-boarding of new employees and higher employee retention.
At PAKRA, we find that when Serious Games are used in conjunction with Game Mechanics in real-work processes, it provides even more sustainable success than when Serious Games are used in isolation. The results that we see when our clients use both Serious Games and Game Mechanics are given here.
Unsurprisingly, PBL-based Game Mechanics in isolation from Serious Games are also of limited use in that they motivate early-adopters but not middle-adopters. Here’s why:
First, PBL mechanisms are typically designed with personal accountability as the only control. These 360-degree-visible leaderboards motivate very few middle-adopters. Some interaction designers in the PBL world use “Shamefication” of non-participants to motivate—that is, mechanisms that cause an employee to participate to avoid the shame of not being a team player.
The Neuroleadership literature promoted by David Rock, discusses how the human mind values five specific parameters or currencies as carrots or sticks. These five currencies are Status, Certainty, Autonomy, Relatedness and Fairness (SCARF).
Quick descriptions of these currencies are given below (from Rock’s article)
1. “Status is about relative importance, ‘pecking order’ and seniority.”
2. “The brain is a pattern-recognition machine that is constantly trying to predict the near future.” Clarity of expectations and lack of ambiguity is said to release dopamine that comforts many who crave certainty.
3. “Autonomy is the perception of exerting control over one’s environment; a sensation of having choices.”
4. “Relatedness involves deciding whether others are ‘in’ or ‘out’ of a social group.”
5. Fairness is a perception of fair interaction between people, where ‘fair’ is judged by a moral standard.
Employees assign a rank-value (whether consciously or not) to each of these currencies. For example, let’s say I value autonomy the most. When my brain perceives that my autonomy is threatened by the change coming my way, I see it as a punishment or “stick.” In contrast, if the change brings more autonomy, I see it as a reward or “carrot.” My mental accounting causes me to embrace the change or sabotage the change—or remain indifferent (embrace the status quo) if the change does not affect my currency of choice.
Now consider Shamefication in the context of the SCARF model: Shamefication of nonparticipating employees can work for those middle-adopters who value relatedness as a currency. For all others, Shamefication-based incentives will not work. Mechanisms that are PBL combined with Shamefication need to address all middle-adopters regardless of how they rank-value the SCARF currencies.
At PAKRA, we find that mechanisms that include a failfast learning environment (e.g., Serious Games) nudge the behaviors of all middle-adopters, regardless of how they rank-value the SCARF currencies, as long as they include these features:
1. Teach them the consequences of their actions;
2. Opportunities to practice the change virtually;
3. Calibrate their fun (instead of their real-work) with PBL.
After experiencing these features, middle-adopters are more willing to join the 360-degree-visible PBL in their real-work.
Second, there is a problem of “change fatigue.”
Consider how many times the typical employee is asked to adopt to new processes, new policies, new products, new changes, new regulations, and new learning. At PAKRA, we did a study for a call center in 2009 and found that, on average, call-center agents received 77 notifications per month discussing changes in products, processes, systems, and policies. Each notification asked them to adopt something new. Thirty days later, the typical agent remembered about three of those 77 notifications.
Customers might be asked to change their behavior once in a blue moon, but employees might be asked to change 77 times a month. PBL-based Game Mechanics can motivate individuals once in awhile, but not 77 times a month. In short, PBLs are designed for customers—not for employees. The reality of repeated interactions diminishes the effectiveness of pure Game Mechanics gamification.
Third, there are problems related to PBL mechanisms’ use of badges and leaderboard bragging rights as “carrots.”
These rewards do not translate into something tangible, so they may be fun for early-adopters but they do not motivate middle-adopters. Real-work success is what will nudge middle-adopters from the status quo. The chance to learn on a failfast platform (e.g., Serious Games) while having fun and getting paid to have fun is what makes middle-adopters trust the change and get their much needed nudge. Otherwise, middle-adopters will always find a workaround with or without Shamefication.
Next time you see a PBL gamification expert, ask this question: If you had not deployed the PBL, would the same employees who are currently on the leaderboard of the PBL be your high performers and your highly motivated employees? If the answer is “yes” (and I suspect it will be), these experts and you should consider deploying Serious Games for employee engagement.
At PAKRA, we recommend that you do the following to motivate employees to embrace change:
Step 1: Create a Serious Game where employees can practice prescribed behaviors and learn the consequences of their actions.
Step 2: Calibrate the fun with digital PBL rewards for this virtual practice and for behaviors displayed in the game.
Step 3: After middle-adopters have moved to a comfort zone while playing the Serious Game, calibrate the real work-process with PBL. This way, you have a better chance of nudging all employees to change.
Otherwise, all you get is Shamefication.
Disclosures:
I am grateful for the assists from:
1. My friend and client Dave Landers of American Express, for introducing the term Shamefication to me.
2. My friend and strategic adviser Mary Federico of Organizational Behavior Strategies, for introducing the SCARF model to me.
References:
1. Innovation and Rogers Curve:
a. “Diffusion of Innovations”; Everett M. Rogers; Glencoe: Free Press; 1962
c. “The Failure of Most Entrepreneurial Technological Innovations to Diffuse: What the Literatures Say”; E. O. Chukwuma-Nwuba; International Journal of Management Sciences; Volume 1, No. 11, 2013, pages 463-470
d. “The diffusion of innovation in practice”, Jean Hartley; CLIPS conference, Roskilde, November, 2013
2. Gamification, PBL, and Serious Games
a. “Game Mechanics: Advanced Game Design (Voices That Matter)”; Ernest Adams and Joris Dormans; New Riders; 2012
b. “What’s the difference between Gamification and Serious Games?”; Andrzej Marczewski; Gamasutra; March 11, 2013
c. Wikipedia definition of Gamification
d. “The Gamification of Learning and Instruction: Game-Based Methods and Strategies for Training and Education”; Karl Kapp; Pfeiffer and ASTD, 2012
e. Wikipedia definition of Serious Games
f. “Serious Games”, Clark C. Abt; Viking Press; 1970
3. Customer Engagement, Employee Engagement and Gamification
a. “Deeper Customer Engagement Through Gamification and Gift Cards”, First Data White paper;
b. “Reinventing Customer, Employee Engagement Through Gamification”, Cognizant Technology White-paper
c. “The Engagement Economy: How gamification is reshaping businesses”; Deloitte Consulting White paper
d. “Gamification: What It Is and Why It Matters to Digital Health Behavior Change Developers”; Brian Cugelman; JMIR Serious Games, Volume 1(1):e3; 2013
e. “Designing Behavior Changing Games”; Brian Keith Sullivan; Blog, June 24, 2012
f. “Purposeful games”; MIT Game Lab
g. “Persuasive Games”; Ian Bogost; The MIT Press; 2010
h. “I PLAY AT WORK—ten principles for transforming work processes through gamification”; Florin Oprescu, Christian Jones, and Mary Katsikitis; Frontiers in Psychology, Volume 5:14; January 30, 2014
4. Nudge:
a. “Nudge: Improving Decisions About Health, Wealth, and Happiness”; Richard H. Thaler and Cass R. Sunstein; Penguin Books; February 24, 2009
b. “Nudging the world toward smarter public policy: An interview with Richard Thaler”; Dan Lovallo and Allen Webb; McKinsey Quarterly; June 2011
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