The crowding-out effect of incentives

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. ….[READ]

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