Too Many Award Choices Will Hurt Your Incentive Program

Introduction
When given the option of choosing one item from a group of many items or choosing one item from a smaller group, which would you want?  A better question may be:  which will we feel better about after you’ve made your choice?

This question is the basis for a study and a book.  The study, “When Choice is Demotiving: Can One Desire Too Much of a Good Thing?” and the book “The Paradox of Choice,” take the position that while we desire more options from which to choose, we are becoming increasingly unhappy with our choices. 

This is truly a paradox, and possibly a problem for any incentive program.

Does offering unlimited choice in the form of award Debit Cards or through an ever-expanding choice of certificates and items in typical incentive catalogs do more harm than good?  Is less more?  Will the results of incentive program benefit by reducing choice?

The following provides an overview of the study previously mentioned and highlights some implications for designing award programs.

Background – The Study
In 2000 Sheena S. Iyengar, an associate professor at Columbia University and an adjunct in the Psychology Department published a paper in the Journal of Personality and Social Psychology called:  “When choice is demotivating: Can one desire too much of a good thing?” 

Studies done from the mid-seventies through the eighties seemed to reinforce the notion that increasing choice increases intrinsic motivation and enhances performance on a variety of tasks.  However, the studies conducted by Ms. Ivengar show people become frustrated when choosing amongst many options, are less satisfied with their choices and in many cases refuse to choose! 

In other words – the pain of choosing is greater than the benefit realized by making the choice.

Study Summary

In one study consumers shopping at an upscale grocery store were shown a tasting booth which displayed either a limited (6), or an extensive (24) selection of different flavors of jam.  The central aim was to examine whether the number of options displayed affected consumers' initial attraction to the displayed product and/or their subsequent purchasing of that product.

Results
60% of the customers who passed the extensive selection display of jams, actually stopped at the booth
Only 40% of the customers who passed the limited selection display of jams stopped. 

Thus, consumers seeing more choices were more attracted to the jam booth than consumers exposed to fewer choices, suggesting that greater variety was initially more attractive.

Subsequent Purchasing Behavior

The big AHA! – Nearly 30% of the consumers with fewer choices purchased a jar of jam.  By contrast, only 3% of the consumers exposed to greater choices purchased a jar of jam.

Almost 10 times as many people bought jam when experiencing a limited choice vs. a more extensive choice!

In another study students in an introductory social psychology class were given the opportunity to write a two-page essay as an extra-credit assignment. Students were given either six, or thirty, potential essay topics on which they could choose to write.

Results
Of the students given limited-choice, 74% turned in the assignment. By contrast, only 60% of the students given more choices chose to complete the assignment.

The quality of the work was also compared.  On average, students with limited-choices performed statistically, better than those greater choices. 

The results from both studies suggest that giving people more choice does not necessarily lead to enhanced motivation.  Quite the opposite seems to be the case.  In both studies, people actually seem to prefer to exercise their opportunity to choose when their choices are limited, and in the second study, they even performed better.

Thus, the results of these studies support the hypothesis that extensive-choice may be more appealing, but is subsequently more likely to reduce motivation. 

What Happened?  Why do people want choice but are unhappy when they have to choose?

Limited-choices make people engage in rational optimization—to try to decide on the best option.  However, as number of possible choices increase, people short-cut that process because of time and energy and choose based on what meets minimum requirements or - "satisfice" – and then stop when they find any choice that seems acceptable.

In other words, when people have "too many" options to consider, they simply strive to end the choice-making ordeal by finding a choice that is merely satisfactory, rather than optimal.

To Sum Up…

Many choices are initially attractive

…But

People enjoy making choices more when the selection from which to choose is limited
People are more satisfied with their choices when chosen from a limited selection
People perform better when ask to do something from a limited choice of options

If this research is correct it should have huge impact on the way in which incentive and performance improvement programs are developed. 

 Implications for Performance Improvement Program Design

Understand the Dynamic
Participants are conditioned by society that more is better, but don’t understand the implications of choosing from the “more.”  Therefore, programs must be designed in a way that do not overtly limit participant choices, but provide the impression that their choices are unlimited. 

Knowing that unlimited choice will ultimately end up being a dissatisfier in the program is the first step in the cure. 

Our goal as professionals should be to design the program in such a way as to keep all participants happy – unlimited choice – while providing easy ways to make choices to eliminate the dissatisfaction with the outcome.

Many arguments abound on the power of giving people choices.  The biggest is that giving unlimited choice will ensure that a participant will find what they want.  This assumes the participant knows what they want.  This is a big leap in that many people do not take the time to determine which awards they want from a program but simply focus on the number of points, credits or dollars their behavior will drive.  Only after knowing what one wants will having a large number of options provide the likely probably of finding their choice.  The participant has to set the objective of the search first… then the options need to be displayed.

Current program design does this backwards… “Here’s your unlimited choice of options… now find what you prefer.” 

As this study indicates this structure will ensure that participants are overwhelmed with choices, feel frustrated in the hunt for the appropriate choice and ultimately be unhappy with the item selected.

It’s the Process not the Options

In this research study, participants were drawn to, and happier with, extensive choices – more people stopped at the jam stand with more jam.  However, when push came to shove and a decision needs to be made, satisfaction with their choice decreases and actual performance lags.  This seems to indicate that the option to choose is highly desirable, but the process of choosing deflates our initial satisfaction and will in the end, cause us to be less satisfied with our choice.

Therefore, offering many options for redemption – through a catalog or unlimited options through a debit card – is highly desirable and will cause most participants to see that as a better reward vehicle.  However, as these experiments indicate, this is a sure way to have unhappy participants in the end.  Participants in performance programs are making decisions based on limiting the pain of making bad decisions.  Is this the way they should feel for performing above and beyond?

So what does this all mean? How can we offer a large selection of awards AND have happy participants?

Manage the Choosing Process

The incentive industry has become very adept at managing the earning process.  From old-fashioned standings reports mailed to the home to online accounts that can be accessed 24/7 the participant can see what has been earned, when it was earned and how it was earned.  The participant knows their earnings in a program but doesn’t have any connection to the redemption process or the experience of using the reward they ordered – the true trophy value of their effort.  But less effort has focused on the “choosing process.”

As the studies show, the choosing process is complicated and the satisfaction a participant feels with their choices is a function of the process they had to go through to make the decision.  Simply providing more choices is actually making the participant unhappy and limiting the effect of the program. 

A successful program should manage the choosing process to eliminate as many hurdles to satisfaction as possible. 

Ideas include:

Expand the “wish list” functionality to help participants choose items for other members of the family (extended or otherwise) by asking for birthdays and gifts they’d like to give.  Once the “wish list” is completed the system can remind the participant prior to the birthday and ask for shipping instructions.  The system can also ask the participant for permission to ship once the appropriate number of points is reached – and send a confirmation email when completed.

Asking for gift ideas further reduces negative feelings about the choice made since they are giving a gift and no one is every sure whether a gift is the right gift and the receiver rarely is ungrateful for the thought.

Provide More Opportunities for Limited Choice

Currently most programs are structured so that the participant earns points over the course of the program and then go to the catalog and “shop” for items.  The fallacy in this scenario is the participant isn’t shopping.  Shopping denotes that you have something particular in mind and are out looking for it.  In many cases participants don’t have an idea of what they “want” at the beginning of a program and therefore the entire experience of “shopping” for an award is foreign to them. 

Throughout the term of the program participants should be “offered” limited choices – for limited times – to redeem their points.  The limited choices could be taken from historical trends on redemption and also provide a discount from the point values in the general ongoing catalog.  This process would encourage redemption, reduce the stress associated with choosing an award and ultimately provide greater motivation to the participant.  All of these benefits will drive program performance – which is what you are buying in the first place.

Ask First, Assemble Later

At program onset each participant could be asked to list their desires and needs for the next three to six months.  From this list a custom catalog – limited by the choices made up-front– would be assembled and electronically delivered to the participant.  This would be the “main” catalog from which they would redeem.  During the course of the program additional special offers could be provided to expand the choice if necessary. 

This option would require a very astute understanding of the program rules and earnings potential in order to ensure the awards are meaningful yet attainable.

In this scenario there would be no “merchandise” catalog or travel options – it would simply be “my catalog” based on my desires and my willingness to work toward a goal.

 The Bottom Line
Having unlimited options, can lead people to dissatisfaction with the choices they make and actually reduce intrinsic motivation.

Our job is to provide programs that influence behavior and have people happy to do it.  It’s time to re-think what we believe.

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