Using Behavioral Economics to Drive Performance & Engagement – Brain Principles

This is the second of a three-part blog series based on Michelle Smith’s article in PPAI Magazine titled Behavioral Economics. Read her entire article here.

In the first post of this series, we learned that using the principles of Behavioral Economics to tap into emotional energy in your motivation programs helps foster higher levels of employee productivity, engagement and retention. Now let’s talk about adding Behavioral Economics to your incentive and recognition programs.

Using the principles of Behavioral Economics, you can make more of an impact when presenting incentives or giving recognition. This will help your program be more successful and keep your employees engaged throughout their careers.

1.       The Halo Effect

The brain strategically files memories with other related experiences. While a combination of factors determines the filing relations, the strongest is the emotion associated with the experience. This is called the halo effect. When more highly positive emotional experiences are created in the workplace, a person has a positive view of the company. These experiences can range from birthday wishes on your special day to receiving an award for your hard work on a project.

2.       Emotional Stamps

Your wedding day and your first fender-bender are easy to recall, while remembering what you had for breakfast last Tuesday is more difficult. This is because lasting memories have been marked with emotional stamps, making it easier for your brain to store and retrieve them. The stronger the emotional stamp, the easier the memory recall. This principle of Behavioral Economics reinforces the necessity for incentive and recognition programs to tap into recipients’ emotions to have maximum impact.

3.       Frequency Bias

The more frequently we see things, the more familiar and positive we feel about them. For example, when recognition is part of an organization’s culture, employees will feel more comfortable giving and receiving praise. This makes them more engaged with their coworkers and in their own role.

4.       Temporal Bias

People remember short, peak emotional experiences more than daily experiences that generate little emotional response. To take advantage of this bias, ensure all recognition presentations and events always end on a high, emotional note.

By incorporating one or more of these principles into your organization’s recognition and incentives program, you will improve employee engagement, motivation and retention.