Incentives that can improve workplaces with Professor and Author Uri Gneezy

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.