A lot of people who are new to Gamification assume it comes in two flavors:
- Reward the user with virtual badges
- Reward the user with prizes and monetary rewards
I’ll skip right to the big reveal: successful Gamification usually involves neither of these. The first thing to understand is that there’s no such thing as a virtual reward. Badges aren’t rewards — they’re symbols of rewards. A Gamification program that starts and ends with badges is destined for failure. Most people get this on an intuitive level, which is why so many assume that prizes and monetary rewards are the solution. So it might come as a surprise to learn that offering monetary rewards doesn’t work very well, either.
The extrinsic rewards problem (a.k.a. “Pay them More”)
The benefit to extrinsic rewards, and the reason why they seem so appealing, is that they’re really easy to design. Cash bonuses, gifts and the like don’t take much thought. The problem is, monetary rewards invite employees to do math. And when people do math, they almost always come to the conclusion that they aren’t being paid enough. It’s human nature. “I worked the weekend for a $100 coupon? That’s only $6.25 an hour!”
The obvious solution, then, is to offer more money, but unfortunately there’s a limit on the amount of money you can give your employees before it becomes unprofitable. Salaries tend to be market driven, and it usually isn’t feasible to exceed them significantly.
It gets worse
And we haven’t even started talking about the studies that show monetary rewards can actually hurt performance. The thing about monetary rewards is if the math is bad, employees feel insulted and if the math is good, they have all this stress over all the money they’re going to lose if they screw up. Salaries are guaranteed but incentive programs aren’t. Plenty of studies have shown that nothing hurts performance as much as stress. The bottom line is, motivationally, extrinsic rewards are often a lose-lose proposition.
So what’s the alternative?
If the answer isn’t badges for the sake of badges, and it’s not badges for the sake of prizes, what could the answer possibly be? Before you throw up your hands and walk away, I’ll say that there is a solution — it’s just not a terribly obvious one. And it involves discussing human motivation.
What motivates people?
Why do people do the things they do? This is possibly the single most complicated question facing humans. Fortunately, we can frame it a little because we’re specifically talking about workplace motivation.
Employees at Work
Employees are people who are being paid for their time and effort. The employee-employer relationship is a directed relationship (the boss tells the employee what to do), but it is also a voluntary relationship (the employee can quit their job if they want). It’s important to recognize the voluntary nature of work because it means employees have options — they choose a particular job not only for its salary but for its benefits and opportunities:
- Developing skills and reputation
- Interesting challenges
- Building professional connections
- The satisfaction of getting stuff done (tasks that have a meaningful and structured end)
Early last century, employees might have stuck with a job simply for the pay. These days if an employee feels like they aren’t getting all of the points above, there’s a stronger chance they’ll start looking for a new job. According to researchers, skilled employees are only going to become more difficult to find and retain in the future, and fulfilling all of their motivations is going to be essential in doing so.
Remembering the complexities of employee motivation can be hard. To simplify it, think about the list of motivations from the perspective of how employees want to feel:
- Smart
- Successful
- Socially relevant
- Structured
How does Gamification address these motivators?
The long answer would take at least four more articles to explain. The short answer is: by connecting badges to meaningful personal stories of learning, success, social connections and structure. Gamification is all about setting goals, tracking progress and substantiating the kinds of personal success that typically go unnoticed or underappreciated.
So…when to use money as a motivator?
Is there any time when it’s a good idea to do so in the workplace? The answer is almost always no. You can offer employees bounties to do extra jobs, such as with referral bonuses, but this isn’t really Gamification. It’s just another employment contract. (In the case of a referral bonus, employees are given the opportunity to work part-time as a recruiter).
Monetary rewards to motivate core workplace responsibilities only make sense in the rare cases where employees already feel smart, successful, socially relevant and structured. If these intrinsic motivations are already met, and the company still wants to incentivize a little more performance out of those willing to go the extra distance, a monetary prize, for top users, might be appropriate — but only if the intrinsic motivators have been addressed first.