Incentives Don’t Help People Change, but Peer Pressure Does

What motivates people to change the way they work? When organizations introduce new processes or systems, or when they want to stimulate performance for certain business practices, they often assemble dedicated task forces, assign them specific goals, and identify deadlines and financial rewards.

But once the initiative is completed and the bonus cashed, a question always arises: will behaviors and business practices stick around, or will people drift back to their old ways of working? In a recent study conducted in a California hospital, I found that that the type of incentive matters. In particular, peer pressure appears to go a longer way than money does.In the study, which is currently a working paper, I used hospital data on hand hygiene to study how a temporary intervention would influence the persistence of performance improvements beyond the duration of the initiative. Hospital workers are expected to sanitize their hands every time they enter and exit a location where they might be in contact with a patient. Hand hygiene is such an important element of infection prevention that hospitals are required to measure their performance and report it to the Center for Medicare and Medicaid Services. Yet many infection prevention officers claim that hand hygiene performance at their hospitals is unsatisfactory. And while communication campaigns and electronic monitoring have scored varied degrees of success in getting people to sanitize their hands, these experiments have not demonstrated whether their effectiveness would survive beyond the intervention period. I wanted to find out if the improved performance would stick around as a habit.

In the case of the California hospital, the hand-hygiene improvement initiative lasted 90 days, at the end of which, conditional upon achieving the target performance, hospital employees would receive a one-time bonus of $1,200. Communication about the initiative made it very clear that this was a one-time incentive. In addition, there were no changes in the way hand hygiene was assessed; in accordance to the guidelines published by The Joint Commission, a nonprofit health care accreditation and certification organization, the hospital employed secret shoppers to observe and report hand hygiene behaviors. The only visible change for the workers was a bi-weekly progress report (prior to the initiative, hand hygiene performance was included, among many other metrics related to infection prevention activities, in a quarterly scorecard). In other words, while the specific goal and monetary incentive was new, as was the frequency of feedback, the information workers had access to about the effects of neglecting hand hygiene, and the way compliance was monitored, was not.

Because hand hygiene performance was measured and reported at the organizational level, every person working at the hospital was responsible in contributing to the campaign’s outcome. But according to California law, physicians cannot be hospital employees (as opposed to, say, nurses or technicians). Because of this, their hand hygiene performance would contribute to achieving the hospital-wide goal but they would not be eligible to receive any performance bonus.

Thus, the employees devised various creative ways to put pressure on doctors, albeit informally and not in the form of cash. Physicians that demonstrated good hand hygiene practices would have their names written on hand-shaped paper cards and posted on a wall, for examples. The chief nursing officer would send physicians “love notes”: celebratory emails underlying good performance, or respectful — but firm — reminders of the importance of their cooperation to achieve the collective goal, depending on the physician’s observed behavior.

When all was said and done, we compared hand hygiene performance data from the quarter before the intervention to the two quarters after the payment of the one-time bonus. On average, bonus-eligible hospital employees improved their performance during the 90 days of the initiative, but then progressively trailed back to levels of performance as low or worse than prior to the initiative. Physicians, on the other hand, demonstrated a slower improvement relative to the other employees, during the 90 days, but maintained a significantly improved hand hygiene performance over the remainder of my observation period. That is, while monetary incentives generated a more pronounced improvement, it was short lived. On the other hand, peer pressure techniques generated a change in organizational behavior that persisted beyond the removal of the incentive.

These findings echo one of the main concerns associated with monetary rewards that sometimes fail to accomplish their goals. Academics refer to this phenomenon as the crowding-out effect of explicit incentives on intrinsic motivation. In other words, associating an economic value with a certain activity changes the nature of the exchange. If health care workers sanitize their hands because it is in the best interest of the patient (and themselves), introducing monetary rewards may change their motivation to a contractual exchange of hand sanitizing for money.

The consequences of this modification are twofold. First, the economic value communicated by the bonus amount might be lower than what that activity was worth in the person’s mind, thus making it not worth the effort or lowering its priority when multiple activities compete for the person’s time. Second, the change in the nature of the exchange creates a contractual expectation, by which the absence of further payments would justify withholding the behavior. Whether monetary incentives can disincentivize desired behaviors altogether or simply reduce the likelihood that the activity persists beyond the bonus payment, managers must take these risks into consideration when they introduce an improvement initiative.

That is not to say that managers should avoid using monetary incentives. Even if hand sanitizing didn’t stick among some bonus-eligible employees, the existence of the monetary incentive helped generate the peer pressure applied to the physicians, leading to longer-lasting success. Additionally, some individuals may react more positively than others to monetary incentives. In my study, for example, I find that those hospital workers who improved their performance the most during the 90-days initiative were more likely to maintain higher hand hygiene compliance afterwards than those whose performance stayed the same or got worse over the same time period. Managers can use the initial reaction to the incentive by specific employees as a predictor of long term effects of the interventions, allowing them to provide additional initiatives for people who are less likely to persist in the desired behavior.

While this study focused on hand hygiene performance in hospital settings, my findings apply to a much larger set of circumstances. Temporary initiatives and one-time bonus programs are common in many industries and include the implementation of new information systems, compliance with new regulatory requirements, or safety protocols, and the adoption of new technologies. In many of these cases, management expects the incentivized behavior to stick. But they would be wise to understand when and why this actually occurs.

by: Susanna Gallani