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The role of prosocial benefits in encouraging innovation

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The role of prosocial benefits in encouraging innovation

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When we try and encourage certain behaviours in the workplace, there’s a strong perception that the primary tools in our arsenal are intrinsic ones.  For instance, various studies into what motivates people to participate in open innovation challenges suggest the main reasons revolve around a love of the topic and freedom to express themselves.  The loot on offer to the winner seldom gets a mention.

I’ve written a few times about the role of extrinsic factors (usually pay) in collaboration.  One experiment revealed that in controlled settings where no incentives were given to either cooperate or not cooperate, that individuals typically behaved in a self-interested fashion. They literally did not trust each other when there was nothing for them to exchange.

The researchers then introduced a form of currency to see what impact it would have on cooperation between participants, and found that it had a significantly positive impact. Whereas previously individuals would act in their own interests, when currency was added, they began using them in exchange for help, and vice versa expecting payment for help they offered to others.

“It’s not that they trusted others, but they trusted that others would help in exchange for a token,” the researcher explained. “This object, which has no intrinsic value, acquired value and became a symbol of trust.”

Does pay have a role in innovation?

A recent study from the University of Toronto set out to explore whether pay and bonuses had any impact upon innovative ideas or new products.

They trawled through around seven years of survey data and found that, whilst salary and performance related bonuses had little impact upon innovation, prosocial bonuses and other employee perks did seem to.

“You can pay employees to innovate if you do it properly. But be aware that individual incentives really are not going to help,” the researchers declare.

The findings chime with research into so called prosocial bonuses, whereby employees are awarded a bonus under the proviso that they award that bonus to a strong performing colleague.  They calculated that when a $10 bonus was given to a salesman to spend on himself, he only generated $3 in extra sales, so a $7 loss.  When the salesman was given a $10 bonus to give to a colleague however, the prosocial bonus yielded an extra $52 in increased sales.

The Toronto study suggested that innovation is largely a collaborative endeavour, and the prosocial benefits are designed to encourage collaboration.  It also suggests that spreading the benefits also spreads the risk, therefore encouraging employees to take a punt.

Suffice to say, prosocial bonuses are not really in the mainstream, yet, but an increasing body of research suggests that won’t remain the case for long.

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