During an extended heat wave, a southwestern energy company looked for a creative way to reward employees who participated in the firm’s wellness programs. It put up a few pop-up carports in the employee parking lot next to the office, and awarded these cool, shady spots to individuals designated as “wellness employees of the month.” The carports quickly became highly popular, spurring robust efforts among employees to win one of the coveted spots.

Similarly, a California technology firm gave employees who participated in its wellness program an option: receive $100 over the next several pay periods or request that the company donate it to charity. A significant number of employees — across all pay levels — chose the charity option. Another company considered paying each employee $100 if they collectively achieved a 70% health assessment completion.

What employers like these have in common is the realization that new strategies are needed for using incentives to influence behavioral change among employees. Innovative employers offer not only traditional financial rewards such as premium discounts and contributions to health accounts, but also relevant, timely, non-financial and group-based rewards.

[Image credit: Bloomberg]
[Image credit: Bloomberg]

OptumHealth research found that traditional financial incentives can be an effective tool for driving engagement in one-time, awareness-building activities such as health assessment and biometric screening participation.

However, while incentives can increase participation in longer-term behavioral change programs such as wellness coaching, the connection between offering incentives and achieving outcomes, such as health risk reduction, is less clear.

While it still makes sense to reward those for enrolling in coaching or condition management, future incentive designs might involve lower value but more frequent incentives. They might also use different motivators to encourage enrollment in such programs.

Here are five key strategies for transforming incentive design:

1. Incorporate non-financial rewards. Although financial rewards are still a critical motivator for employees and remain useful, employers should strive to find a better balance between financial and non-financial rewards. The next-generation approach to incentives focuses on motivating and engaging employees because of the perceived intrinsic value in the effort, rather than because of external incentives. Transitioning from solely extrinsic financial rewards toward social recognition of intrinsically motivated behavior will pave the way for long-term behavioral change. Non-financial rewards include:
o Social recognition from peers and managers participating in public events such as physical activity challenges or 5k fun runs
o Certificates and plaques
o More resources such as enhancing a break room, buying fitness equipment or making other health-oriented improvements
o End-of-the-week party or a casual dress day
o Preferential parking

2. Expand group-based benefits. Rewarding an employee with a premium discount for achieving an outcome, such as lower blood cholesterol, certainly benefits that individual employee, but doesn’t help build a firm-wide culture of health. Incorporating group-based and individual rewards can help generate greater value from incentives. An alternative might be to give all employees extra paid time off if 80% of the entire workforce completes a biometric screening or walks 100,000 miles. These incentives help build culture, strengthen peer support, improve transparency and make the activities more enjoyable.

3. Provide immediate rewards. Participating in a health fitness challenge typically yields a premium reduction the following year. That’s a long time for employees to see a return on their investment. Behavioral economics research confirms that reward frequency and timing is an important lever for change. If an employee knows she will receive a benefit soon after completing a task, she is more likely to do it. One example is digital currency or gift cards that can be used to shop online immediately after an activity or outcome is achieved.

4. Recognize total well-being. Expand the boundaries of health to include measures of well-being, quality of life and financial security. For example, consider rewarding employees who have completed an advanced medical directive or have met with a financial counselor. Volunteering with a local social organization or donating to a charitable organization could also be recognized.

5. Personalize rewards. Accounting for individual variation in response to incentives is also key. For example, while one employee might need to create a personal budget and meet with a financial counselor, another seeks to change his diet and lose weight. Activities should be individualized based on what is relevant to each employee’s total health and well-being. In the future, predictive models and intelligent recommendation engines will be used to determine what types of incentives each employee responds to and how to vary the frequency of incentives to keep them motivated.

Incentives are an effective tool to increase wellness program participation. To drive longer-term behavioral change however, consider a mix of traditional financial incentives with new, tailored and timely ideas to drive interest and engagement.

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