Saturday, April 2, 2011

Incentives and Stigmas

I've spent quite a bit of time thinking about the use of incentives in wellness programs. In the past two days, I've read two posts that have this issue on the forefront of my mind again. Paul Herbert wrote about what he called, The Best Study So Far on Cash vs Non-Cash Reward. The big take-away for me...
"It says that compensation establishes the transactional baseline for a job and that awards create a more social and emotional connection which drives behavior. 
It also tells me that the process – how you give the award – is critical in how the employee assigns value. If you just dump it in with their pay – you stay on the transactional side of the equation and get nothing for the effort. If you separate it out and provide a “moment” where you recognize and reward – with something other than “pay” – you get a much different – and much more effective result."
It's becoming more common for employers to provide premium reductions to employees that meet certain health measures. If employers are expecting these incentives to change behavior, I think they may be disappointed. I actually worry that they’ll be perceived as a penalty and start a rift between fit and unfit staff. If that happens, you could lose any trust and good will you built up with your wellness program. And, then you’ll have little opportunity to really help people make changes that will improve their health. Fran Melmed wrote this thought provoking post, are things going to get ugly? a growing fat stigma.

Some employers, of course, aren't looking at the premium reductions as an incentive. It's logical to charge people that are likely to have high claims more right? We accept this without question when it comes to auto and life insurance. But, what happens to trust and teamwork when these are perceived as fines?

Additional Reading:


Bob Merberg said...

Nice insights, Janet. I just came from a conference where I had several revelations regarding the trends related to outcome-based wellness programs. Planning on blogging about it myself, but I need to gain some distance first.

It's true, as you say, that employers think it's logical to charge more to people who are likely to have higher claims, based on biometric test results. I'll refrain from judgement on that POV. But I do wish they'd stop calling it wellness. LIfe insurance companies don't call it wellness. When employers test your cholesterol to determine your medical coverage rates, it's not wellness; it's surveillance.

Paul Hebert said...

Great connection Janet. However, I think we may be combining two things - One - Changing behavior and two maintaining it.

Breaking the inertia of bad health behaviors is best supported with a good incentive plan. When I look at incentives - they should only really be used to install or break a behavior. In the case of wellness I can see incentives being used to get the person moving in a specific direction. Those incentives should stand outside the normal "transactional" part of the compensation discussion for best impact.

However, maintaining that behavior may be best handled by imposing a penalty on those that don't meet specific requirements. ie: smokers pay more...

Be careful though... as a childcare facility that started using fees as a penalty for picking up kids after 6 found out - the minute they imposed the penalty they created a situation where they had an increase of late pickups because people now saw that as a transactional behavior - ie: "late=$" - and had less embarrassment and less social stigma attached to the behavior. When it was just a "rule we live by" they had less people coming in late because it was a social contract.

Slippery, slippery slope this wellness stuff...

Janet McNichol said...

@Bob Thanks for your comments. I'm looking forward to reading your post.

@Paul I truly believe that you get what you pay for. The problem with incentive design is that most of us aren't very good at thinking through all the repercussions. My son taught me the best lesson in this respect. His 4th grade teacher had an incentive plan set up to encourage good behavior. Each child started with a certain number of points and if the child still had a positive balance at the end of a month, the student was able to participate in a little party. My son, viewed the points as he would basketball fouls. He intended to use them in certain situations and save just enough that he could attend the party. I'm certain this is not what his teacher had in mind, but it was a perfectly reasonable interpretation.

Bob Merberg said...

Your story about your son is a classic, Janet -- a fine example of how rewards are extremely effective... at getting people to learn how to earn rewards.

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