Episode 22: Incentives that can improve workplaces
With Uri Gneezy
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Key Takeaways
In this week’s in-depth episode of the Leading Real Change podcast, I discuss the value of incentives with behavioral economics professor Uri Gneezy, who is also the author of the book ‘Mixed Signals: How Incentives Really Work’.
In this episode, Uri explains how incentives really work, as they often don’t deliver the results we expect. In fact, they can backfire. Should you charge more in hot weather for a cold drink or charge less in cold weather for a cold drink?
This is why every new incentive should be tested before being scaled.
Uri and I discuss the different social and systems challenges in the workplace including remote work, paid leave, and affirmative action.
Uri explains when incentives can work and how incentives are not always financial, sometimes a positive workplace culture and more focused work hours can incentivize retention and productivity.
In some situations, we may not even realize what our incentives are communicating or that our policies we are favoring one group more than another, unintentionally incentivizing certain workplace behaviors.
As more companies embrace motivational strategies to engage workers including recognition and rewards programs, understanding the psychology and science behind motivational tools will help convey the right message and outcomes.
Although behavioral economics is not a new science, Uri reminds us how little we understand about how humans will react to new stimuli. Uri always tests these assumptions before making recommendations. This is why we should also be skeptical of computer science models that claim they can predict human behavior. Every new situation and solution is new, with new parameters and potential consequences. Checking our assumptions actually play out in real life scenarios, is an important part of learning what works, when and with whom.
Guest Bio
Uri Gneezy is the Epstein/Atkinson Endowed Chair in Behavioral Economics and professor at the Rady School of Management at the University of California, San Diego. He received his B.A. in economics at Tel Aviv University and Ph.D. in economics at Tilburg University. Gneezy joined UC San Diego in 2006. He is also a visiting professor at Yong Loo Lin School of Medicine, National University of Singapore. Prior to that, he was a professor at the University of Chicago, the Technion and the University of Haifa. He was a visiting scholar at the University of Amsterdam, NHH Bergen and Burgundy School of Business.
As a researcher, Gneezy focuses on putting behavioral economics to work in the real world, where theory can meet application. He is looking for basic research as well as more applied approaches to the study of when and why incentives (don’t) work. His research covers topics such as incentives-based interventions to increase good habits and decrease bad ones, behavioral health economics, gender differences in reaction to incentives, and how incentives affect deception and ethical behavior in general. In addition to the traditional laboratory and field studies, he is working with firms on using basic findings from behavioral economics to help companies achieve their traditional goals in non-traditional ways.
Gneezy’s research includes over 100 peer-reviewed journal articles, for which he won the Most Highly Cited Researcher prize for the last 8 years. He is a coauthor (with John List) of the international best seller The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life and author of Mixed Signals: How Incentives Really Work which describes his academic work in a more accessible way to non-academics
