In the fast-paced world of the gig economy, where app-based workers rely on platforms like DoorDash and Uber for their livelihood, the question of how to effectively motivate these workers is a critical one. A recent study conducted by the University at Buffalo School of Management sheds light on the most effective strategies for incentivizing gig economy workers, revealing some surprising findings.
The study, soon to be published in Management Science, explored the impact of both monetary and non-monetary incentives on the participation levels of gig workers. What the researchers discovered was that while both types of incentives—such as cash bonuses and digital badges for good performance—were effective when offered separately, combining them had a counterintuitive effect. Rather than enhancing the impact of monetary rewards, the addition of non-monetary incentives actually diminished their effectiveness.
According to study co-author Ram Ramesh, Ph.D., the reason for this unexpected result lies in the unique nature of gig work. Unlike traditional employment settings where verbal recognition may hold significant value, gig workers often prioritize financial rewards due to their lower earnings potential. As such, when faced with a choice between a pat on the back and a cash bonus, gig workers may feel shortchanged by the former.
To test their findings, the researchers conducted 12 micro-randomized field trials in collaboration with a major on-demand platform. By varying the combinations of monetary and non-monetary incentives offered to gig workers, they were able to observe how different incentive structures impacted worker participation. In addition to their main discovery about the diminishing returns of combining incentives, the researchers also found that the framing of incentives played a role in their effectiveness.
One interesting finding was that positioning incentives as potential losses, a practice known as “clawback,” had a significant impact on the effectiveness of non-monetary rewards. By framing incentives in this way, workers were more motivated by the fear of missing out on a reward than by the promise of gaining one. This nuanced understanding of how incentives are perceived by gig workers can help platforms tailor their approaches to better meet the needs and expectations of their workforce.
As the gig economy continues to expand and evolve, the importance of understanding how incentives impact worker behavior cannot be overstated. With gig workers often interacting with platforms through apps rather than human managers, the relationship between workers and their jobs is often transactional in nature. By recognizing the subtle nuances of how incentives influence behavior, platforms can work towards creating a more sustainable and satisfying environment for their digital workforce.
In conclusion, the study’s findings offer valuable insights for platforms looking to effectively motivate their gig economy workers. By understanding the unique preferences and motivations of gig workers, platforms can design incentive structures that maximize worker participation and satisfaction. As the gig economy continues to grow, these insights will be crucial for the long-term success of digital platforms and the workers who rely on them.
