What Can Your Mother Teach You About Incentives?

In 2003 the economist Anton Suvorov developed the “principal agent theory”.  He investigated the way agents (think employees or children) react to the interventions of principals (think bosses or parents).  He looked at the way rewards and bonuses act.  All very clever and insightful stuff.

I was discussing it with my mother.  She smiled at me a bit disparagingly and uttered the immortal words “tell me something I don’t know”.

A mother’s take on incentives

  1. If you offer a child a reward for doing something, maybe emptying the dishwasher, the child will instantly believe unloading the dishwasher is an undesirable way to spend their time.  (Try persuading a four-year-old not to unload the dishwasher, maybe one filled with your best dinner service, and you will see the opposite effect.)
  2. Once you have agreed a price, say fifty pence to empty the dishwasher, the price is set in stone.  There is no stepping back, try offering twenty pence the following day and it isn’t happening.  It is easy to get locked into pay for performance, no fifty pence piece, no dishwasher emptying.
  3. After a while the child will want a pay rise, fifty pence may work for a while, but sooner or later the child will grasp the concept of child slavery and start pushing for an increase.  They will start to believe they are hard done by.  Fifty pence will be sixty pence in the blink of an eye.  You are on a slippery slope.
  4. Finally, the minute (make that millisecond) the child has secured the reward, done the absolute minimum necessary to get the payment, they will be back, sitting on their bum, watching the TV.  There is no extra mile in this game.  Why would any self-respecting child hang around and wait for the opportunity to load the dishwasher when they have only just emptied it?

Turning a joy into a job

The author Dan Pink (who no doubt also has a wise mother) took this idea and made a small jump.  See if you agree with him…

Children are predictable, you don’t need to be the Brain of Britain to work out what is going through a nine-year-old’s mind.  Their logic repeats.

If you offer them an incentive to do something that should be rewarding, maybe playing the piano, doing their homework or reading a book they will respond in exactly the same way as they respond to emptying the dishwasher.

Playing the piano will simply become a job they do for money; it will stop being something they do for fun or for sheer enjoyment.  They would rather veg out in front of the TV.

The reward might well work in the short-term, but as a long-term way to change a child’s behaviour you are on a hiding to nothing.  All you will have achieved is to turn something that should be a joy into a job.

And once they have finished their job, they will revert to the TV.

The twist

Adults aren’t that different to children.  Their behaviour is more sophisticated, but their motivations are pretty much the same.

Now, ask yourself what is the effect of the sales incentive you use in your call centre, or the bonus you use to “motivate” your staff to hit a quarterly target?

Does it engage your employees?  Do they romp through the target and keep going, or do they hit it and stop right there, waiting for the next incentive before they lift a finger?

Treat me like a child and I will act like a child ~ Anon

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Dirty Dishes

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Comments

  1. Hello James

    Incentives work but not in the way that is the accepted wisdom. Incentives, take away from the pleasure/meaning of the work itself. What I was happy to do willingly, now I will not do unless you pay me for it. And when you pay me for it it suggests that it has no value in itself, it is work and I should be paid for it.

    Penalties work but not in the way that is accepted wisdom. Penalties convert social norms into market norms and thus encourage/legitimise anti-social behaviour (Kahneman and Tversky showed this in the case of the Israeli kindergarden and parents turning up late to pick up their children). The penalty did not make the parents come on time and pick up their children. Because they no longer felt guilty (social norm to market transaction) more parents turned up late and paid the fine. And then there was no going back. A new norm had emerged.

    Performance metrics work but not in the way that is accepted wisdom. Accepted wisdom is that “what gets measured gets done”. The practice, that which show up in practice is closer to “That which gets measured gets manipulated”.

    Your mother is wise. And the whole subject matter reminds me of Tom Sawyer and how he went about enrolling the kids to help him whitewash the fence. A profound insight into the way human beings work.

    Maz

  2. James,

    Thanks for addressing this prevailing fallacy in performance management. I work with a lot with doctors’ offices and I see too many clinics who can’t understand why their patient wait times aren’t acceptable, when they incentivize their staff (read: “pay them a bonus”) if the visit times are within a certain threshold. I like to tell them that money is the cheapest motivator. Whatever happened to the patient? Shouldn’t they matter? Isn’t their care and satisfaction the ultimate goal? How about respect for their time? These selfless, emotional drivers keep the focus on the right goal and don’t turn a good thing into a faceless transaction.

    Regarding children, what works with mine is this: “You can get that new X-Box if you can earn and save enough money for it.” Next thing I know, they are bugging my neighbor to rake his leaves (for the 3rd time this week). Knowing what makes them tick is the key. Where paid incentives fail is when I connect them to a regular chore or routine — suddenly, a responsibility becomes a business deal, and they miss the point while eschewing the work, just as you said.

    Great blog. Enjoyed reading it.

  3. James Lawther says:

    Thank you for your comments Gentlemen

    If either of you crack the children thing please let me know

    • Hello James
      I have the privilege and hassle (depending on what mood I am in) of being father to three children. Each is unique. And there is no script that works with all of them. When I am best I am sensitive to each of them and act accordingly.

      The second point is that even the same child has to be handled differently on different occasions. It is the same person before me physically and yet the place he is at can and often is very different to where he was at during our last encounter. So I have to be present, judge the situation and act accordingly.

      What I can say with absolute clarity is this: it is difficult to undo that which you have done. If you have built a certain way of being/behaving in the 0 – 5 years then it is hard to undo it. If you want discipline then that is what you have to put into the game of your life and our relationship with the child. If you want them to keep their rooms tidy then that is what you have to practice and encourage them to do – so that it occurs to them as something natural (that which goes with living) rather than something unnatural.

      I made plenty of mistakes with my eldest. I learnt and made less mistakes and different mistakes with the second one. And I learnt and made less/different mistakes with the third one.

      Oh, a valuable lesson I learnt: if some way of being in the world is fundamental to the child’s identity then you are going to find it an uphill struggle to get that child to change his way of being. For example, if I see my child having a messy room as a negative and yet my child sees it as a positive, an essential part of his/her identity, and in fact she is proud of being messy then it is hard to get him/her not to be messy. For her not to leave a mess, I would need to be on her back (nagging) constantly. That is tiring and does not work.

      All the best
      Maz

  4. Hi James,
    When you say “Adults aren’t that different to children.” I fear that you give adults too much credit.

    Adrian

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