Back in May, we held a health tweet chat with I2I’s (Incentive Intelligence’s) managing director and lead consultant Paul Hebert about designing incentives for health engagement (you can read the recap here). There were a few points that bore further exploration, which Paul answers below.
Fran Melmed: More companies are considering outcome-based wellness programs, where employees receive a financial incentive for reaching a specific outcome (for example, completing a lifestyle management program or hitting a target BMI and cholesterol level). You mentioned on our chat that “outcomes are not always behaviorally based. I can only influence behavior, not outcomes.” Can you elaborate on what you mean in relation to these outcome-based programs?
Paul Hebert: Incentives at their core are about changing behaviors — getting people to do the things that result in the outcomes we want. When incentives are based purely on outcomes, then the behaviors can be variable.
Outcome-based incentives can create bad habits
For example, I could starve myself to hit the goal and earn the incentive. Long term, my behavior wasn’t about being healthy but about the goal. The same rule applies in sales situations. If you pay based solely on outcomes, you can actually drive behaviors that harm the company, such as selling too low or making a deal that closes the sale but puts the company at some sort of risk.
When incentives are purely outcomes-based, you’re really communicating, “I don’t care how you get to the goal. Just get to it.” This is particularly problematic in wellness initiatives, since the way to earn the incentives would be to hit the goal, backslide and then hit the goal again — a continuous incentive loop.
Sales people do this a lot. They stop selling when they hit the goal, wait for the next incentive and then start selling again. When incentives are behavior-based, you’re really helping create habits, not just rewarding the outcomes from those habits.
FM: You cautioned that financial incentives make the decision about health transactional, meaning that we decide whether the money being offered is worth the effort. You also made a distinction between a reward and recognition, saying that rewards break inertia and recognition sustains it. Can you give an example of an appropriate use of a reward for health and one for recognition?
Paul Hebert: In wellness, it isn’t too far of a stretch to say you’re fighting 20, 30, even 40 years of habit. That’s a lot of inertia to break. Short-term incentives are what you need to get people to abandon habits they’ve built for years.
I’d look at incentives that may be richer than the behavior may indicate. Give a $100 non-cash award for completing the health risk assessment, for example. Then i’d offer an incentive that gets employees to join a wellness group of some sort, or to start walking one mile a day for a week, then two miles a day, etc., for a specific period of time.
At first, the incentive should be for very specific behaviors and rewarded quickly. Each rewarded behavior builds on the last one until the new behavior is more familiar. Then the timing and the reward value can start to taper off. It’s not unlike the effort it takes to push a rock. At first you need to really push. After that, you can keep it rolling with less and less effort.
Recognition can come into play to help people maintain habits and to make the culture of wellness visible in the organization. You can publicly single out people for their ongoing efforts. Also, recognize those who help others. Recognition communicates “the way we do things around here.” It’s general in scope and personal in application. Incentives are much more personal in scope — or should be.
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Explore the Role of Incentives in Performance Management
“Things we highlight communicate the culture”
FM: You spoke of incentive programs needing to be time-boxed, yet most workplace wellness incentives repeat themselves year after year, whether in the form of premium reductions or other cash rewards. What would you advise companies to do instead?
Paul Hebert: I don’t see premium reductions as an incentive. They’re ongoing recognition and smart business. I think we get into trouble when we use premium reductions as an incentive rather than a consequence. The incentive and recognition rewards focus on the behaviors needed to be healthy. Premium reductions are a consequence of that. They shouldn’t be positioned as the incentive.
FM: We spent a lot of time on financial incentives and very little on other non-financial incentives, like leadership expectations and cultural norms. Care to add more to this barely touched upon thread?
Paul Hebert: Each company is different, but the environmental cues and the things we highlight communicate the culture.
Can the company put the corporate workout room near the entrance where the majority of employees come in, highlighting the value they place on physical activity? Can the company provide more cash registers near where the healthy food is, reducing the time it takes to get healthy food vs. less healthy food and subtly directing employees to those lines? What about putting the hamburgers at the back of the cafeteria? Or having the “bad” foods accessible only in a vending machine down on the first floor while every floor has healthy snacks?
Many companies hold “all hands on deck” meetings to highlight the contributions of specific employees to the overall company performance (usually salespeople/account people). What if they also highlighted performance for those employees who are getting in shape, reducing stress, etc.? They’d communicate to employees that the company really cares about the person and the performance. [Fran adds: and they may note some connection between better health and better performance.] It all gets back to the subtle clues you use in an organization to reinforce that the company values the health of their employees.
Editor’s Note: Fran Melmed’s next CoHealth chat is on June 15 at noon Eastern/9 am Pacific. You can find out more about the chat and the group here.