RED HOT Contributors

 

Why Use Incentives to Promote Well-Being to Employees?

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It’s been few years since I was last involved in supporting wellness initiatives with consumer incentives.  Since then, companies have continued to increase the amount of money spent on encouraging employees to take part in health and well-being improvement initiatives.

A while back, as the wellness incentive market began to take shape, employers seemed to take a competitive mindset about the need to raise the ante to keep their workforce activated in addressing health improvement actions. But it seemed to make no sense to me: Why pay people anything at all to participate in free programs intended to help them?

Last week I picked up Dan Pink’s Drive again, which thoroughly reinforces this point and provides insights about the value of intrinsic and extrinsic motivation for influencing behavior. More on that in below.

The wellness space is evolving as a growing chorus of critics challenge the design and intent of many programs and as the emphasis shifts toward a broader focus on total well-being. With these changes occurring, it’s time to take a fresh look at incentives.

Wellness Incentives

The premise behind wellness has always make good sense to me. Take better care of yourself and it’s less likely you’ll encounter many preventable problems or conditions. It also follows that employers would want to promote wellness to their workforce to keep them healthy and productive and minimize health insurance rate increases.

But over the past several years, there have been a number of missteps in the workplace wellness arena. In my view, one of the bigger mistakes has been the reliance on financial incentives to influence people into taking actions intended to move them along a continuum toward better health.

The sequence of events generally begins with a screening to determine who needs what kind of support or behavior change program, then efforts are made to get them to participate, and then encouragement is provided so they to stay with it and achieve the desired result.

Most people are inclined to resist for any number of reasons, hence the supposed need for incentives.

Incentive Design

I can recall seeing a presentation at my first wellness conference over a decade ago in which the speaker, from a large vendor company, presented data about the effectiveness of incentives in gaining completions of health risk appraisals (HRAs). His analysis indicated that higher payments yielded more participation, up to a certain point and then there were diminishing returns.

Over the years, vendors and their customers would look to these sorts of data to help guide their decisions about how much to invest in incentives. It had become a forgone conclusion that it was necessary to pay people in order to have a meaningful level of participation within a population.

Looking back, a big “miss” for the industry was the failure to look outside the employee wellness frame of reference for insights about motivational strategies. I don’t believe there was sufficient review and analysis of the science of motivation to help inform incentive decisions – or, if there was, it didn’t make it into very many employer/vendor tactical plans.

Even as behavioral economics edged into the health and wellness space and offered “non-incentive” approaches, it was seen more as a shiny new object than as an important input to potential solutions.

Today’s Spending

As noted, employers have continued to increase their incentive spending. According to the latest survey on corporate Health and Well-Being from Fidelity Investments and the National Business Group on Health, 74% of respondent companies said they have employee incentives for well-being, with the average amount per employee up to $742 in 2017, compared to $651 last year and $521 in 2015.

And another study also reinforced the continued validity of incentives. The Willis Towers Watson 2015-2016 Global Staying@Work report says that 70% of 487 US-based employers surveyed said their primary strategy to promote healthy behaviors was to offer direct financial incentives though, perhaps optimistically, only 47% state that financial incentives would be their primary strategy in 2018.

Band Aids are Temporary

As I gained career experience in the wellness area, I began to see these payments as Band-Aids intended to cover over the deficiencies in corporate culture that might otherwise lead to a more natural acceptance of the wellness offerings – assuming they were consistent with strategic intent, mission and values.

Rather than push people along in the direction we that we feel is best for them, it would seem better to let them find their way by being attracted to the principles of the company and the examples set by the leaders. Or as Neal Sofian of Premara is fond of saying, “Use suction not pressure.”

Incentives are, by a marketer’s definition, designed to provide a short term bump in sales. In my earlier career in consumer advertising, there was an ever-present tension between advertising strategies and promotional tactics. Advertising is thought to be good for building brand image and long-term equity, while promotion is good for a short-term sales increase, say to achieve a quarterly volume quota.

Motivation 3.0

In Daniel Pink’s Drive, he outlines “operating systems” that produce motivation and argues it’s time for a new framework of thinking and acting. He says Motivation 1.0 was all about survival (before our time); Motivation 2.0 is based on external rewards and punishments (current state); and Motivation 3.0 is the necessary upgrade where “purpose maximization is taking its place alongside profit maximization as an aspiration and guiding principle (desired state).”

Employers that are invested in purpose and culture – along with the requisite business strategies – are often able to synch their well-being initiatives with business purpose to create a balanced mix of people caring both for the business and caring for their own selves. They are generally more successful, should be able to eliminate incentives and fit well with Pink’s expanded definition of Motivation 3.0 as integrating Autonomy, Mastery and Purpose.

He makes a clear case that extrinsic rewards can have a negative effect on motivation, and he documents several examples where task outcomes are diminished by promises of financial incentives.

Extrinsic motivation is most relevant when a task is routine. But when it comes to creative and non-routine tasks, extrinsic motivation can decrease not only commitment to the task, but also the thinking process necessary to achieving success.

This is particularly true for behavior change initiatives which involve a more complex set of choices.  He relents that for transactional events, say completing an HRA or taking part in biometric screenings, paying people to participate can be effective – but then the question then is, to what end. An HRA or screening really only has impact if there are follow-on activities. And then there are the privacy concerns, and employee skepticism about underlying goals of wellness programs.

In one chapter, he concludes with his list of “Seven Deadly Flaws” about Motivation 2.0. Can you relate these points to wellness incentives you may have seen?

  1. They can extinguish intrinsic motivation
  2. They can diminish performance
  3. They can crush creativity
  4. They can crowd out good behavior
  5. They can encourage cheating, shortcuts, and unethical behavior
  6. They can become addictive
  7. They can foster short-term thinking

He says throughout the book, “We have a mismatch between what science knows and what business does…”

Well-Being Needs Marketing, Not Incentives

As the market matures, and continues to evolve toward a well-being emphasis, I’d argue that there needs to be better marketing with an eye to the long-term results. When I with Healthways, an early leader in the well-being area, I’d push our teams to do more to truly define well-being for consumers:

  • What does well-being mean to them?
  • Why should they care about it?
  • What can they achieve with more well-being?

I believed we needed to more to provide better context. We needed to give them a rational and emotional story about why well-being is important and what they had to gain through emphasizing it in their daily lives.

Going forward, employer and their vendors have an opportunity to step up their marketing strategies and plans to set the stage for long term well-being success by reinvesting their incentive dollars into meaningful campaigns and programs that promote positive and sustainable behaviors and a culture of well-being.

 

Frank

About Frank Hone

Frank Hone, CCXP is a healthcare customer experience and engagement strategy leader with a unique platform. Since 2008, when he published “Why Healthcare Matters,” a business book on healthcare consumerism, he's used advertising and marketing principles to drive deeper and better customer experience and consumer engagement with healthcare solutions. Across the many phases of his career, I’ve focused on customer experience, from advertising and new product work to healthcare engagement and consumer marketing. With broad expertise across many healthcare sectors, his current emphasis is on designing strategic frameworks that incorporate behavioral economics, process excellence, journey mapping, digital engagement and relationship marketing principles that can create meaningful customer experience. Through his recent leadership positions at Healthways, Healthcentric Partners, and Healthx, he's served dozens of customers, helping them achieve their business objectives related to health system steerage, population health, administrative cost savings, and other areas by developing relevant solutions that promote positive customer experience.

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