Wednesday, August 14, 2013

‘Hybrid’ Organizations a Difficult Bet for Entrepreneurs

12 AUG 2013  RESEARCH & IDEAS  Harvard Business school
Hybrid organizations combine the social logic of a nonprofit with the commercial logic of a for-profit business, but are very difficult to finance. So why would anyone want to form one? Julie Battilana and Matthew Leeinvestigate.

Consider two organizations with the same noble purpose: to solve the problem of poor eyesight in developing countries. The first, the Centre for Vision in the Developing World, follows a traditional nonprofit model, soliciting donations that fund the creation and distribution of specially designed eyeglasses that can be calibrated by the user to circumvent the need for an optometrist. The second, VisionSpring, follows a different approach, working to build a network of entrepreneurs who sell eyeglasses in their communities. Rather than raise funds through donations, it sustains itself primarily by the sale of the glasses themselves.
VisionSpring is what organization scholars call a "hybrid" social venture, since it combines the social welfare logic of a nonprofit and the commercial logic of a for-profit business. When hybrids work, they can be a fantastically creative means of solving real-world problems in totally self-sustaining ways, harnessing the strengths of both for-profit and nonprofit models.
But they are a difficult bet for entrepreneurs starting out in the field of business. Because hybrid social ventures fall into a gray area between business and charity, they aren't easily funded by venture capitalists on the one hand or philanthropic foundations on the other.
So what would make anyone want to create a hybrid organization? That is the question Harvard Business School Associate Professor Julie Battilanaand doctoral candidate Matthew Lee ask in a new working paper, How the Zebra Got Its Stripes: Imprinting of Individuals and Hybrid Social Ventures.
"It's much harder to get started and be successful if you don't fit into a well-defined form that people understand," says Lee. "Creating a new hybrid is difficult to explain as a rational choice taking this limitation into account."
Lee and Battilana sought other explanations for the existence of such "zebras," including the entrepreneur's family, education, and work background. "Knowing these social ventures are diverging from the more traditional commercial or nonprofit ventures, we wanted to understand what made their founders diverge," says Battilana.
In order to gain that understanding, the researchers partnered withEchoing Green, a nonprofit that funds social entrepreneurs through a highly competitive fellowship program. The organization agreed to facilitate research on the many early-stage social entrepreneurs who applied to the annual program. The researchers followed up with a survey that asked questions about their background and experience, ending up with more than 700 responses in their final sample.
Some of what they found was to be anticipated. Sure enough, having a family member who worked in a for-profit firm as opposed to a nonprofit organization corresponded closely with an individual's tendency to incorporate a business logic into his or her venture.
"When you are in a family background and you are socialized into that environment, you adopt certain ways of thinking and behaving and internalize certain values that are dominant in your environment," says Battilana.
The same went for educational background. "When you are exposed to a certain type of content, you start internalizing it and taking it for granted," she says.
The final factor, work experience, however, didn't play out as might be expected. Working for a few years in a commercial firm significantly increased the chances that an entrepreneur would create a hybrid social venture rather than a traditional nonprofit. But after that initial spike, the increase diminishes with each successive year. After 22 years working in a corporate environment, additional business experience actually makes an entrepreneur less likely to incorporate that experience into a social venture. (The researchers corrected for age in their analysis.)
Lee and Battilana explain this finding by pointing out that as people stay in a certain type of organization for a number of years, they may become more rigid in their modes of thinking about organizational possibilities and less able to see connections between different modes. When longtime businesspeople go on to start a social venture, they are consequently less likely to see how the for-profit and social welfare approaches can be combined. In this way, business experience may actually make them more likely to create a traditional charity, rather than a hybrid social venture.


That's good news for those who are considering starting a hybrid social venture, an increasingly popular interest among her students, says Battilana.
"Young people are getting more and more excited about these new forms of entrepreneurship, but they also realize it's quite complicated, so they think they need to get some for-profit experience to equip themselves," she says.
According to the researchers' findings, however, they may not need as much corporate experience as they think.
"Many people are asking themselves when they should jump from their corporate job to start the social venture they've been dreaming about. Our findings suggest that if you're working in business to get the business mindset, there may be a case for jumping sooner," says Lee. 


Boston-based writer Michael Blanding is the author of The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink.

Thursday, May 16, 2013

Why Isn’t ‘Servant Leadership’ More Prevalent?


With servant leadership, a leader's primary role is to serve employees. Everyone from Lao-Tzu to Max De Pree thinks this a wonderful model. Why then, asks Professor Jim Heskett, is this style so rare among CEOs?

 by Jim Heskett

Servant leadership is an age-old concept, a term loosely used to suggest that a leader's primary role is to serve others, especially employees. I witnessed a practical example of it at a ServiceMaster board meeting in the 1990s when CEO William Pollard spilled a cup of coffee prior to the board meeting.

Instead of summoning someone to clean it up, he asked a colleague to get him cleaning compound and a cloth, things easily found in a company that provided cleaning services. Whereupon he proceeded to get down on his hands and knees to clean up the spill himself. The remarkable thing was that board members and employees alike hardly noticed as he did it. It was as if it was expected in a company with self-proclaimed servant leadership.

Lao-Tzu wrote about servant leadership in the fifth-century BC: "The highest type of ruler is one of whose existence the people are barely aware…. The Sage is self-effacing and scanty of words. When his task is accomplished and things have been completed, all the people say, 'We ourselves have achieved it!'"

It is natural, rightly or wrongly, to relate servant leadership to the concept of an inverted pyramid organization in which top management "reports" upward to lower levels of management. At other times it has been associated with organizations that have near-theological values (for example, Max De Pree's leadership at Herman Miller, as expressed in his book, Leadership is an Art, that emphasizes the importance of love, elegance, caring, and inclusivity as central elements of management). In that regard, it is also akin to the pope's annual washing and kissing of the feet as part of the Holy Thursday rite.

The modern era of servant leadership began with a paper, The Servant as Leader, written by Robert Greenleaf in 1970. In it, he said: "The servant leader is servant first … It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead … (vs. one who is leader first…) … The best test, and difficult to administer, is: Do those served grow as persons … (and become) more likely themselves to become servants?"

Now it appears that a group of organizational psychologists, led by Adam Grant, are attempting to measure the impact of servant leadership on leaders, not just those being led. Grant describes research in his recent book, Give and Take, that suggests that servant leaders are not only more highly regarded than others by their employees and not only feel better about themselves at the end of the day but are more productive as well. His thesis is that servant leaders are the beneficiaries of important contacts, information, and insights that make them more effective and productive in what they do even though they spend a great deal of their time sharing what they learn and helping others through such things as career counseling, suggesting contacts, and recommending new ways of doing things.

Further, servant leaders don't waste much time deciding to whom to give and in what order. They give to everyone in their organizations. Grant concludes that giving can be exhausting but also self-replenishing. So in his seemingly tireless efforts to give, described in the book, Grant makes it a practice to give to everyone until he detects a habitual "taker" that can be eliminated from his "gift list."

Servant leadership is only one approach to leading, and it isn't for everyone. But if servant leadership is as effective as portrayed in recent research, why isn't it more prevalent? What do you think?

Max De Pree, Leadership is an Art (East Lansing, MI: Michigan State University Press, 1987)

Adam Grant, Give and Take: A Revolutionary Approach to Success (New York: Viking Press, 2013)

Robert K. Greenleaf, The Servant as Leader (Westfield, IN: The Greenleaf Center for Servant Leadership, 2008)

C. William Pollard, The Soul of the Firm (New York: HarperBusiness and Grand Rapids, MI: ZondermanPublishingHouse, 1996)

how to spot a liar

13 MAY 2013

Key linguistic cues can help reveal dishonesty during business negotiations, whether it's a flat-out lie or a deliberate omission of key information, according to research by Lyn M. Van Swol, Michael T. Braun, and Deepak Malhotra.

Want to know if someone's lying to you? Telltale signs may include running of the mouth, an excessive use of third-person pronouns, and an increase in profanity.

These are among the findings of a recent experimental study that delves into the language of deception, detailed in the paper Evidence for the Pinocchio Effect: Linguistic Differences Between Lies, Deception by Omissions, and Truths, which was published in the journal Discourse Processes. Asked why the topic of deception is important to business research, negotiation expert Deepak Malhotra responds wryly: "As it turns out, some people will lie and cheat in business!"

Malhotra, the Eli Goldston Professor of Business Administration at Harvard Business School, coauthored the paper with Associate Professor Lyn M. Van Swol and doctoral candidate Michael T. Braun, both from the University of Wisconsin—Madison. "Most people admit to having lied in negotiations, and everyone believes they've been lied to in these contexts," Malhotra says. "We may be able to improve the situation if we can equip people to detect and deter the unethical behavior of others."

"Evidence for the Pinocchio Effect" fills a key gap in the field of deception research, says Van Swol, the study's lead author. Previous studies have examined the linguistic differences between lies and truthful statements. But this one goes a step further to consider the differences between flat-out lying and so-called deception by omission—that is, the willful avoidance of divulging important information, either by changing the subject or by saying as little as possible.

To garner a sample of truth tellers, liars, and deceivers by omission, the researchers recruited 104 participants to play the ultimatum game, a popular tool among experimental economists. In the traditional version of the game, one player (the allocator) receives a sum of money and proposes how to divvy it up with a partner (the receiver). The receiver has the option of either accepting the proposed split or refusing the allocator's proposal—in which case neither player gets any of the money. Because receivers will often reject offers they perceive as unfair, leaving both parties with nothing, it behooves the allocator to offer an amount that will be deemed fair by the receiver. In many instances, allocators choose to share half, Malhotra says.

For the purposes of the deception experiment, the rules of the ultimatum game differed from the traditional version in three ways. First, in this version, the allocator received an endowment of either $30 or $5 to share with the receiver. The receiver had no way of verifying how much money the allocator had been given, information which the allocator was not required to divulge. Hence, an allocator could conceivably give the receiver $2 and keep $28, and the receiver would be none the wiser, perhaps assuming only $5 was in play. The second change was that if the receiver rejected the allocator's offer he or she would receive a default amount of $7.50 (or $1.25)—whereas the allocator would get no money at all.

Finally, each game included two minutes of videotaped conversation in which the receiver could grill the allocator with questions, prior to deciding whether to accept or reject the offer. This provided ample opportunity for the allocator to tell the truth about the money, lie, or try to avoid the subject altogether. "We wanted to create a situation where people could choose to lie or not lie, and it would happen naturally," Van Swol says.

Ultimately, the receiver had to decide whether the proposed allocation was fair and honest, based only on a conversation with the allocator. Thus, it behooved the allocator to be either a fair person or a good liar.

As it turned out, 70 percent of the allocators were honest, telling the receivers the true amount of the endowment and/or offering them at least half of the pot. The remaining 30 percent of allocators were classified either as liars (meaning they flat-out lied about the amount of the endowment) or as deceivers by omission (meaning they evaded questions about the amount of the endowment, but ultimately offered the receiver less than half).

After a graduate student transcribed all the allocator/receiver conversations, the researchers carefully analyzed the linguistic content, comparing the truth tellers against the liars and deceivers in order to suss out cues for deception. They looked for both strategic and nonstrategic language cues.

"A strategic cue is a conscious strategy to reduce the likelihood of the deception being detected," Van Swol explains, "whereas a nonstrategic cue is an emotional response, and people aren't usually aware that they're doing it."

In terms of strategic cues, the researchers discovered the following:

Bald-faced liars tended to use many more words during the ultimatum game than did truth tellers, presumably in an attempt to win over suspicious receivers. Van Swol dubbed this "the Pinocchio effect." "Just like Pinocchio's nose, the number of words grew along with the lie," she says.
Allocators who engaged in deception by omission, on the other hand, used fewer words and shorter sentences than truth tellers.
Among the findings related to nonstrategic cues:

On average, liars used more swear words than did truth tellers—especially in cases where the recipients voiced suspicion about the true amount of the endowment. "We think this may be due to the fact that it takes a lot of cognitive energy to lie," Van Swol says. "Using so much of your brain to lie may make it hard to monitor yourself in other areas."
Liars used far more third-person pronouns than truth tellers or omitters. "This is a way of distancing themselves from and avoiding ownership of the lie," Van Swol explains.
Liars spoke in more complex sentences than either omitters or truth tellers.
The researchers also examined when and whether the receivers trusted the allocators—noting instances when receivers voiced doubts about the allocators' statements, and correlating the various linguistic cues with the accuracy of the receivers' suspicions. They also noted instances in which receivers showed no suspicion toward deceivers.

On average, receivers tended to trust the bald-faced liars far more than they trusted the allocators who tried to deceive by omission. In short, relative silence garnered more suspicion than flat-out falsehoods. "It turns out that omission may be a terrible deception strategy," Van Swol says. "In terms of succeeding at the deception, it was more effective to outright lie. It's a more Machiavellian strategy, but it's more successful."

In the latest phase of their research, the team is investigating the linguistic differences between lying in person and lying via email. Results regarding the latter may be increasingly useful as a larger portion of business is now being conducted via email, and such communications leave a transcript that can be analyzed carefully—and at leisure—by suspicious counterparts. "People detect lies better over the computer than they do face-to-face," Van Swol says.

That said, the researchers are quick to emphasize that linguistic cues are most definitely not a foolproof method of detecting lies, even among those who are trained to look out for them.

"This is early stage research," Malhotra says. "As with any such work, it would be a mistake to take the findings as gospel and apply them too strictly. Rather, the factors we find to be associated with lies and deception are perhaps most useful as warning signs that should simply prompt greater vigilance and further investigation regarding the veracity of the people with whom we are dealing.

Author : Carmen Nobel is senior editor of Harvard Business School Working Knowledge.

Thursday, April 18, 2013

First Minutes are Critical in New-Employee Orientation


Employee orientation programs ought to be less about the company and more about the employee, according to new research by Daniel M. Cable, Francesca Gino, and Bradley R. Carmen Nobel

The first few minutes of new employee orientation, if done right, can lead to happier and more productive workers and, ultimately, increased customer satisfaction. Unfortunately, a lot of companies do it wrong.
In many firms, employee orientation focuses solely on corporate culture and identity of the new workplace. There's a lecture about the firm's history and another about standard operating procedures. There's a packet of information from human resources, emblazoned with the firm's logo, and maybe a coffee mug to match.
The underlying message: Welcome. You should be proud to work here. Please fit in accordingly.
But research suggests that employee orientation ought to be less about the company and more about the employee. In their paper "Breaking Them In or Eliciting Their Best? Reframing Socialization around Newcomers' Self-expression," published in the March 2013 Administrative Science Quarterly, a research team finds that shifting the focus to an employee's personal identity leads to an increase in both employee retention and customer satisfaction.
"Organizations will talk about recruiting from outside the company because they need new ideas and new blood, but then there is this tendency to shut off the new and basically transfer the corporate culture over to the new employee," says Francesca Gino, an associate professor at Harvard Business School who cowrote the paper with Daniel M. Cable of London Business School and Bradley R. Staats (HBS MBA '02, DBA '09) of the University of North Carolina Kenan-Flagler Business School. "It was interesting for us to think about how part of your identity seems to go away as you go through that process."
Previous studies have shown that employees are especially productive and happy when employers encourage them to use their individual signature strengths on the job, but historically those studies did not consider the employee onboarding process, Gino says. The researchers hypothesized that companies would see positive performance results by emphasizing employee individuality from day one, testing their hypothesis through a series of field and lab experiments.
For starters, they conducted a field study at Wipro, a major business process outsourcing company based in Bangalore, India, that provides telephone and chat support for its global customers. Traditionally, Wipro's orientation for call center employees consisted of an informational session about the company, followed by several weeks of training in which new call agents) must demonstrate proficiency in English, as well as an aptitude for following standard procedures during customer calls.
Individuality was not just discounted; in some ways it was expressly discouraged. "As a service role, the job can be stressful, not only because employees must help frustrated customers with their problems, but because Indian call center employees are often expected to 'de-Indianize' many elements of their behavior—for example, by adopting a Western accent and attitude," the paper explains.
Wipro was dealing with a big dropout dilemma; more than half of its call center employees quit only a few months after training. "Wipro presented us with the problem of figuring out whether there was anything we could do to reduce turnover," Gino says. "We thought it was the perfect environment to test whether we could make a difference just by changing something minor in the onboarding process."


In the field experiment, the researchers divided batches of new call agents into an individual identity group, an organizational identity group, and a control group. The control group went through the traditional process, focused on firm awareness and skills training. The two identity groups received the same training as the control group, but also an additional hour-long presentation, which varied according to the group.
For the individual identity condition, a senior leader at Wipro spent 15 minutes discussing ways in which working at the company would enable the newcomers to express their individuality. Next, the new call agents completed an exercise ranking the individual strengths they would exhibit if stranded on a life raft at sea; they also spent time considering how their responses might differ from their colleagues'. Then, the agents answered a series of questions about their individual strengths such as, "What is unique about you that leads to your happiest times and best performance at work?" Finally, the agents shared their strengths with their future officemates.
At the end of the session, employees in the individual identity group received fleece sweatshirts embroidered with their individual names, along with a name badge. They were asked to wear them for the duration of employee training.
For the organizational condition, new employees spent 15 minutes listening to a senior Wipro leader and a "star performer" at the company talk about why Wipro was a singular place to work. Next, the newcomers spent 15 minutes writing answers to questions such as, "What did you hear about Wipro today that you would be proud to tell your family about?" Finally, the group members discussed their answers with each other.
At the end of the session, employees in the organizational identity group received fleece sweatshirts embroidered with the company name, along with a badge. They were asked to wear them for the duration of employee training.
Seven months later, the researchers looked into whether the orientation changes affected how long the newcomers/agents chose to stay with the company. "Considering we just changed one hour on the first day of orientation, the results were amazing," Gino says.
The turnover rate in the control group was 47.2 percent higher than that of the individual identity group, and 16.2 percent higher than that of the organizational identity group. And turnover was 26.7 percent higher in the organizational identity condition than in the individual identity condition. Additionally, employees in the individual identity group had garnered higher customer satisfaction scores during the seven months than those in the control group.
To further study the reasons behind the findings, the researchers conducted a similar experiment in the controlled environment of a university lab. They recruited 175 college students for a three-hour study, conducted over two consecutive days. The students were told at the start that they would be working on a series of tasks, including data entry. All participants completed day one of the study (receiving $35 for their trouble). They were given the choice of whether to return on the second day (in which case they'd receive an additional $15).
As with the field experiment, some participants were placed in a control group, others engaged in activities that stressed individuality (creating personalized nametags, for example), and some focused on the identity of the organization (such as creating a logo for the research lab).
After the experiments, participants filled out a short questionnaire about their experience in the lab, indicating their level of agreement with statements such as, "Within this research team, I felt like a distinctive person." These were meant to measure what the researchers call "authentic self-expression."
Lab participants in the individuality group reported higher levels of authentic self-expression than those in the organizational group. Individuality group participants also performed better and faster on data-entry tasks than those in the other groups. Furthermore, those in the individuality group were much more likely to return to the lab on the second day, indicating that the opportunity for self-expression is indeed directly related to employee retention.


For employers, the implications of the findings are pretty clear: "Given that the standard, organization-focused approach of employee socialization is so common, it would benefit managers to think about an alternative approach where there's more room for newcomers' self-expression, Gino says. "This is a pivotal stage of the employee/employer relationship, and there are ways to emphasize people's individuality so they can bring it out into their jobs. To Wipro's credit, after seeing the results of the study, the company redesigned its employee orientation process such that personal identity socialization is a part of it."
NOTE TO READERS: In the next step of this research, Professor Gino and her colleagues are looking to discover which aspects of self-reflection during employee orientation are most likely to lead to a happy, effective workforce. For example, will the results differ if employees reflect on their weaknesses as well as their strengths? If you think your company would be interested in participating in a field study on this topic—and possibly improve employee retention and productivity—please write to Francesca Gino directly at 
Carmen Nobel is senior editor of Harvard Business School Working Knowledge.

Thursday, April 11, 2013

How to Demotivate Your Best Employees

08 APR 2013  RESEARCH & IDEAS   

by Dina Gerdeman
Many companies hand out awards such as "employee of the month," but do they work to motivate performance? Not really, says professor Ian Larkin. In fact, they may turn off your best employees altogether
It would seem to make sense that when companies recognize their workers with awards, they are likely to see a boost in morale and perhaps even inspire them to work harder.

It turns out that sometimes rewarding employees for good behavior can actually backfire, leading to a drop in motivation and productivity.
More than 80 percent of companies dole out work-related awards like "employee of the month" or "top salesperson." Managers often view these awards as inexpensive ways to improve worker performance; many believe that when employees bask in the glow of corporate praise, they may even feel motivated to work harder over the long term.
But new research suggests that some awards may actually have the opposite effect, according to a recent paper called The Dirty Laundry of Employee Award Programs: Evidence from the Field, written by Harvard Business School Assistant Professor Ian Larkin, along with professor Lamar Pierce and doctoral student Timothy Gubler from the Olin School of Business at Washington University in St. Louis.
The researchers studied an attendance award program initiated by managers at one of the five commercial-industrial laundries owned by the same midwestern company. Perfect attendance was defined as not having any unexcused absences or tardy shift arrivals during the month.
The plant managers had all the right intentions when they implemented the award program. Absenteeism and tardiness costs US companies as much as $3 billion a year. And in the case of the laundry plant, one worker's tardiness or absence can affect another's productivity. If one team of workers falls behind on the job, for example, other workers down the line are left to sit idle.
The plant's attendance award program began in March 2011 and continued for nine months. Employees with perfect attendance for a month, including no unexcused absences or tardy shift arrivals, were entered into a drawing to win a $75 gift card to a local restaurant or store; the winner's name was drawn at a meeting attended by all the employees. At the end of the sixth month, the plant manager held another drawing for a $100 gift card for all employees with perfect attendance records over the previous six months.
The program did produce one benefit the plant managers were looking for: it reduced the average level of tardiness and led to more punctual arrivals for the workers who participated.


Yet when Larkin and his colleagues took a closer look at employee time sheets and records showing the amount of laundry that actually got done both before and after the program was introduced, they found that the plant—unlike the other four that didn't have an award program—experienced some problems:
  • First, employees ended up "gaming" the program, showing up on time only when they were eligible for the award and, in some cases, calling in sick rather than reporting late. Most interestingly, workers were 50 percent more likely to have an unplanned "single absence" after the award was implemented, suggesting that employees who would otherwise have arrived to work tardy on a certain day might instead either call in sick to avoid disqualification or else simply stay home because they would be disqualified from the award regardless.

    Also, while punctuality improved during the first few months of the program, old patterns of tardiness started to emerge in later months. And once employees became disqualified and the carrot of the award was out of their reach, their punctual behavior slipped back downhill. Larkin says this runs counter to what some people believe—that such an award program might instill a long-term pattern of on-time performance in workers.

    The hope is that with the award "you get them to do what you want them to do in a habitual way," Larkin says. "But we can say it's the exact opposite. There was only a change in behavior while people were eligible for the award."

  • Second, and perhaps more significantly, stellar employees who previously had excellent attendance and were highly productive ended up suffering a 6 to 8 percent productivity decrease after the program was introduced. This suggests that these employees were actually turned off—and their motivation dropped—when the managers introduced awards for good behavior they were already exhibiting.

    These workers may have believed that the award program was unfair; after all, they had been showing up to work on time before the attendance program, so they wondered why an award was necessary and why some employees who used to show up late were winning the award.

    "The award demotivated these employees," says Larkin, who interviewed workers at the plant to gain additional insight. "People believed it was unfair to recognize people who only changed their behavior because of this award. They felt that 'I'm a hard worker, and now they're giving awards for something like attendance. What about me?' "

  • All in all, the award program actually led to a decrease in plant productivity by 1.4 percent, which added up to a cost of almost $1,500 a month for the plant.

    "Having your top performers demotivated for all eight hours on the job ended up creating a much bigger productivity hit than having the extra five minutes of work from someone who came habitually late," Larkin says.
Ultimately, the researchers concluded that rewarding one behavior sometimes can "crowd out" intrinsic motivation in another.


Despite the fact that this particular award brought more harm than good, many other types of award incentives have proven beneficial for companies. But Larkin says corporate managers should manage them closely to make sure that employees aren't gaming the system and that the programs aren't fostering unintended negative effects.
"Many award programs have created value and are cost-effective for companies," he says. "Our paper shouldn't be taken as a blanket criticism of awards. You can't say awards are good or bad. It depends on how they're implemented."
This particular attendance award may have been especially flawed because rather than rewarding workers for exceptional performance, it rewarded them for fulfilling a basic job expectation.
"A lot of awards are focused on identifying people at the top of the class or people who went the extra mile," Larkin says. "This award did not recognize people who went above and beyond. It was an award for a behavior that employees should do."
Also, Larkin believes that awards are more effective when they recognize good behavior in the past, rather than behavior going forward. Plus awards for past performance aren't likely to see as much gaming, he says.
"It's motivational to hear that you've done a good job and are being recognized for doing the right thing," he says. "And it provides a good example for other people. People aren't being rewarded because they changed their behavior to match what the manager wanted or by gaming."
Larkin says that in the laundry study, the reward itself—gift cards—may have led to a higher likelihood of gaming. Sometimes it's better to keep money out of the deal.
"People respond very strongly to monetary incentives with this gaming mentality," he says. "When I talk to companies about award programs, I find myself telling them, 'Don't put in that $500 or the trip to the Bahamas.' It sounds like a nice thing to put in, but it also changes the psychological mindset people have."
Instead, Larkin says that companies may fare better just by giving people a nice plaque, sending an email to staff, or calling a meeting to recognize certain workers publicly in front of the whole crew.
"You can't put a price on that. The recognition of hearing you did a good job and that others are hearing about it is worth more than money." 


Dina Gerdeman is a writer based in Mansfield, Massachusetts.