Jana Gallus: The Role of Precision in Incentives

Jana Gallus, PhD is an Assistant Professor of Strategy and Behavioral Decision Making at UCLA’s Anderson School of Business and our discussion dissected the intersection of behavioral economics, strategy and innovation, by focusing almost exclusively on the way incentives work.

This was a terrific conversation for us because Jana revisited the foundation of incentives that is often overlooked in the corporate world: an “incentive” must include a scheme (rules) and a means (rewards). Too often, corporate clients focus on the reward and fail to consider the rules which to earn the reward by. Or vice versa. The rules become overly complicated in an effort to “be fair,” inevitably diluting the results.

She also helped us dig deeper into aspects of incentives that are rarely covered, namely these three dimensions: (1) Tangibility, sometimes referred to as the element of an award that is physical and can be re-consumed; (2) Social signal, when combined with tangibility is sometimes referred to as trophy value that we can share with family, friends and co-workers; and (3) the Self signal, which is new to our experience and impacts the effectiveness of the reward-based by how well it aligns with the self-identify of the recipient.

Finally, we laughed a lot while we discussed the role that precision plays in incentives and recognition. Frankly, it’s rare that we get to talk to researchers who bring up thought experiments that involve kissing. Jana reminded us how less precision is a key factor in keeping a reward in the realm of recognition.

In our Grooving Session, Kurt and Tim cover some of our own war stories and we recap the key points in the Bonus Track – both follow our recording with Jana.