An article that recently appeared in the Employee Benefit News caught our eye. It discusses the merits of turning wellness incentives structures on its head and rewarding employees with the actual incentives up front with the caveat that they’ll be taken away later if certain goals aren’t met.
Here are a few excerpts from the article that discusses this study and the merits of utilizing “loss aversion” strategies when it comes to general workplace incentives:
“Loss aversion has been well documented in lab studies and there are suggestions that it influences people’s financial decision-making. So it has been found in a lot of areas, but it hasn’t really been applied in the context of incentive pay. But we think it has a lot of potential there,” says Sadoff.
List believes the concept could translate to a corporate setting to promote business goals and increase productivity, such as for employees in a sales division. In order to apply, though, he insists there be some observable metric, such as widget production or services sold, to measure employees’ progress.
In a corporate setting, List still suggests having employees sign a contract, but recommends deducting the amount from payroll or future raises. He believes this would be just as powerful a loss for employees based on research he conducted at a Chinese manufacturing plant.
And here are some excerpts that discusses how such strategies could be tapped for workplace wellness initiatives:
Loss aversion could also engage workers to participate in wellness programs. Employers could use the premise to keep employees engaged in a weight loss program, for example, using an individual or team framework.
“There’s some suggestive evidence that if you combine the concept of loss aversion with teams, it’s even more effective. Especially in a corporate setting, you may not want to pit employees against each other, [but rather] tap into peer pressure and the productivity of teams,” explains Sadoff.
Either way, we believe this is a fresh, bold new twist on utilizing wellness incentives employee wellness programs more effectively that could well dramatically increase both engagement levels and results. Go read the whole article here and let us know what you think.