Wellness in the workplace is no longer a passing fad. Today, more than 80% of large employers in the U.S. use some kind of financial incentive to help employees get active. IBM even offers employees free or low-cost Apple Watches to track their progress.
But just how effective are all these rewards systems at motivating the desk-bound masses? A new study released in the Annals of Internal Medicine Monday suggests all the cash incentives may not be doing much to get employees moving.
In the study, 281 overweight and obese employees at the University of Pennsylvania were asked to carry their smartphones with them throughout the day to track their steps. Some were offered a daily cash bonus ($1.40) for hitting a target of 7,000 steps, and some weren’t.
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Turns out, the workers who were offered a cash incentive were no more likely to increase their step counts than their peers. But the new research did point to a new and surprising solution for getting employees to up their fitness game.
The researchers gave a third group of employees that exact same $1.40 cash incentive upfront in a monthly exercise ‘piggy bank.’ Then, each day those employees didn’t meet their step count, they took the money out of their banks.
The researchers found the workers with ‘piggy banks’ hit their target step goal 50% more often than others.
So why is a program designed around losing an upfront cash haul so much more effective than a payout after-the-fact?
The answer is ingrained in what psychologists call ‘loss aversion.’ It’s the principle that we’ll typically work about twice as hard to keep something than we will to get something new.
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It’s a trick behavioral economists have known about for years. Lead study author Mitesh Patel says this new application for fitness is an encouraging one, especially because this study was only tracking overweight & obese employees.
“If we can engage a less motivated population, that’s evidence we should be doing this on a larger scale” Patel says.
Company wellness programs are already a boon for employers: Health policy journal Health Affairs estimates companies save more than $3 in medical costs for every dollar spent on wellness programs. But Patel says these programs don’t target all employees equally.
“Many of these wellness programs engage people that are really motivated,” he says.
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Patel says it’s all about figuring out how to design better incentives that include everyone, from building teams at work to lowering step counts for less active employees.
But when it comes to designing financial rewards, it’s important to remember: Employees can’t lose what they never had.