Incentives and a gain goal frame: not a good combination

A recent Harvard Business Review item reported that a company implementing a program aimed at reducing workers’ tardiness ended up decreasing productivity… The intrinsic motivation of  “Good employees” ended up lower and others started to game the system.

What happens in these situations is that those employees who are functioning within a so-called normative overarching goal frame [a desire to act appropriately in the service of a collective] are moved towards a gain goal frame [a desire to improve or preserve one’s resources].

Interestingly, If a company sets a gain goal, it sends a signal “down” through the organisation that top management is in a gain goal frame. And due to the contagion effect of these overarching goals, this means that the gain goal frame will spread throughout the organisation. Ultimately, when organisations and people are functioning within a gain goal frame the value creation tends to be lower.

Isn’t that fascinating?

A company with a gain goal such as “maximise profitability” will typically end up providing less value for its shareholders than a company with a normative goal frame, which gives precedence to goals other than profitability and shareholder return.