United’s Bonus Lottery Misstep Highlights Risks of Gamified Rewards

United’s Bonus Lottery Misstep Highlights Risks of Gamified Rewards

When United Airlines announced earlier this month that it was replacing its quarterly performance bonuses with a chance for eligible employees to win prizes in a quarterly drawing triggered by reaching certain performance goals, the blowback from employees was swift and fierce, forcing the airline to quickly backtrack on the plan. By swapping out the modest quarterly bonus for a chance of up to $100,000, United President Scott Kirby had hoped to make the bonus program more exciting for employees, but the Kirby and the rest of United’s leadership misjudged how employees would react to what many saw as a cost-cutting measure that would make it harder for most of them to earn bonuses.

What happened at United can serve as a learning opportunity for other CEOs and rewards leaders, underlining the risks the come with using gamification to motivate employees. Workplace games can sometimes be more effective motivators than cash, as “winning” offers a form of social recognition that financial rewards don’t. Employees can write off losing out on a cash bonus as the price of taking it easy at work, but recognition that is visible to one’s co-workers and serves a social function can motivate them in a different way.

Gamified motivation tactics can also be cheaper and more cost-effective than extra cash, the New York Times‘ Noam Scheiber points out, even if the only prize the game offers is a compliment from the boss. United’s mistake was not in introducing a gamified element to their rewards program, per se, but rather in what it took away to make room for it. In other words, the psychological rewards of winning a competition can be motivational when they come on top of regular compensation, but they can’t be a substitute for it:

“Shareholders and management get the monetary rewards, and ‘meaning’ and ‘excitement’ are consolation prizes that go to workers,” said Caitlin Petre, an assistant professor of media studies at Rutgers University who has examined similar practices at media companies. “This is very much in line with my understanding of how the gamification trend in workplaces operates.” …

Charlotte Blank, the chief behavioral officer of Maritz, which designs employee motivation and incentive programs, said lotteries could be an effective way to pique interest among salespeople in a new product but should not replace crucial components of pay. In practice, however, many companies appear to have a hard time resisting the urge, as United did, to blur the lines between wages and motivation — to shift from paying workers in cash to paying them with less cash and more psychic income.

SHRM’s Dana Wilkie also talked to some experts about why United’s plan backfired. For one thing, the bonus lottery program reflected poorly on the airline’s brand; for another, the company didn’t use all the tools at its disposal to anticipate employees’ reactions, which could have spared them all the embarrassment and bad press:

“When United announced its lottery bonus program, it broke its promise to employees,” said Deb Gabor, CEO of Sol Marketing, a brand strategy consultancy based in Austin, Texas. “But more importantly, it broke its promise to its customers by creating a system that rewards randomness and variability, rather than consistency and caring, creating a condition in which employees aren’t incentivized to deliver experiences that reinforce the company’s promise to customers.” …

“This is why there are focus groups,”[Claire Bissot, managing director of Cleveland-based CBIZ HR Services,] said. “No matter how hard leadership tries to know the people and think like the people, it’s very important to understand, especially in large organizations, that you are an executive. You aren’t the people. Get opinions and feedback, let employees submit ideas, and start with small changes.”