The newly released 2022 Incentive Travel Index (ITI) reports that, overall, the incentive travel industry is strong....
Research / How to Effectively Harness Behavioral Economics to Drive Employee Performance and Engagement
by Incentive Research Foundation
A White Paper on IRF Research Study Using Behavioral Economics Insights in Incentives, Rewards, and Recognition
The Incentive Research Foundation’s (IRF) Using Behavioral Economics Insights in Incentives, Rewards, and Recognition presents new insights—and challenges long held assumptions—on what makes employees work their hardest.
Offering practical takeaways to apply immediately in incentives, rewards, and recognition (IRR) programs, the IRF’s report highlights proven behavioral economics approaches that make sense of—and capitalize upon—the powerful role of emotions in employee performance.
Emerging in recent years as a discipline in its own right, behavioral economics has long been overshadowed by the more readily accepted traditional economics which suggests, among other things, that:
However, because behavioral economics recognizes that 70% of human decision-making is emotional—as opposed to rational—it proves to be a more useful tool than traditional economics in helping employers understand what actually motivates employees, why some incentives are more effective than others, and how they can strategically apply these principles to their own businesses.
Studies indicate that typically only about one-third of employees care about their work. But companies that incorporate proven techniques from behavioral economics into employee motivation programs and other aspects of their business models have a competitive edge and enjoy higher levels of productivity, engagement, and retention among employees than those relying solely on traditional monetary incentives. In most cases, an understanding of the person being incentivized and an appropriate experiential or merchandise reward will result in a far more memorable and impactful reward than cash.
How do IRR professionals decide which rewards to use and how exactly to use them? It’s hardly a surprise that factors like an employee’s age, income, and family status all play into how strong an impact a particular reward has on that particular employee. For a truly effective incentive campaign, IRR professionals should also give careful consideration to these subtle, though perhaps seemingly inconsequential variables:
The IRR community might be astounded by some of the IRF’s findings, many of which are downright counterintuitive. However, the study also sheds light on how to best use these findings and proposes numerous ways to successfully apply these insights in the constantly evolving workplace.
Here are the top recommendations, and the rationale behind them, from Using Behavioral Economics Insights in Incentives, Rewards, and Recognition:
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Attendee Preferences for Incentive Travel explores the impact of destinations on motivation and value perception among the participants themselves.
Given one of the most challenging labor markets in history, incentives are a critical business strategy to help organizations attract, retain, and build culture. During this IRF webinar, we’ll discuss what lies ahead for the incentives industry.