Thatâ€™s the gist of a recent economics study: Letting Down the Team? Social Effects of Team Incentives
This research was conducted while I was at UCSB. I gave the faculty access to a large group study space (50+ chairs) in order to conduct their experiment. They tested incentive reactions in two environments: a library and a gym.
They found that while individuals took advantage of the pay to study here opportunity, incentives tied to team performance resulted in strikingly greater participation:
â€śPeople in two real-world settings raising their effort level because a teammateâ€™s payoff is at stake. Findings indicate that the magnitude of this effect can be considerably larger than that of own pecuniary compensation. In addition, the team incentive scheme in our experiment was 26 percent to 31 percent more cost effective than the individual incentive.â€ť
Ah, the power of (positive) peer pressure!
This is something I thought a lot about over the Thanksgiving Break. There is a narrative here around group work vs. individual projects, but my imagination jumped to the professional work environment. What if salaries were connected to group rather than individual performance? Would you act differently with other peopleâ€™s livelihood on the line? Would it change your behavior? Would people argue less or more? Would we hire differently? Would expectations change?
Instead of salaries, what if it was end of year performance reviews (and hence merit increases) that were tied directly to group output? Would this encourage more cooperation and collaboration? Or more friction? How might interpersonal interactions evolve when money is at stake?
The UCSB study is interesting but Iâ€™m more curious about long-term behavior. If I pay students to study in the library for a month, what happens afterwards? Do they continue using the library on their own? Does it become a habit or daily ritual? Does it lead to them discovering and using additional services? Does it change their emotional perceptions of the space? Do they feel that they are able to study better? And so onâ€¦ that’s the study I want I read.