Gaming the system: how rewards affect performance

April 28th, 2011 by

microtask_rewards_gamificationSometimes the simplest things are the hardest to define. Everyone knows what a game is, but agreeing on a definition is another story. Wikipedia’s no-nonsense entry defines a game as: “structured playing, usually undertaken for enjoyment…with goals, challenges, rules and interactions.” Jesse Schell is somewhat more fun, saying it is simply “a problem solving activity, approached with a playful attitude”.

Although not mentioned in these definitions, a key part of many games is rewards. Checkmate the king – win a chess trophy; explode a bad guy – collect the coins (plus if it’s multiplayer, you get the added buzz of annihilating friends and family).

While such reward systems seem straightforward, the rationale behind them can be incredibly complicated. Should rewards be physical or emotional? Intrinsic or extrinsic? Predictable level-ups or unpredictable Easter eggs? With the rapid spread of gamification into business, developing reward systems that entice people to play is becoming an important industry.

It’s not about the money
Common sense (and free market economics) suggests that the relationship between productivity and rewards should be simple and linear. Say you pay a worker X dollars in return for Y output. Double the dollars and you’d expect to double the output (2X = 2Y). Or so you’d think. But interestingly it appears that in many cases productivity is one of those things money just can’t buy.

Dan Pink argues that increasing rewards only increases productivity when workers are performing repetitive, mechanical tasks (and even then you can run into problems). Unbelievably, when it comes to creative or complex tasks, monetary incentives can actually damage people’s productivity (maybe this explains why so many second albums disappoint).

Mr Pink makes a compelling case. He quotes 30 years of research into employee motivation. Tests and studies have been carried out all over the world by universities including MIT and the LSE. All the data points to the same conclusion, that “once a task calls for even rudimentary cognitive skill, a larger reward leads to poorer performance.” This, of course, has serious repercussions for gamified incentive schemes.

A badge too far
Gamification usually works by layering game-like rewards over existing sites and concepts. You take something people are already intrinsically interested in and use gaming to give the service an “engagement boost”. So Nike+ gamifies running by adding challenges and progress bars. Uber-geeky Q&A site Stack Overflow offers badges as rewards for solving programming dilemmas.

Influential technology research company Gartner recently predicted that by 2015, 50% of businesses will use gamification to “obtain and keep customer loyalty”. The question is, how relevant is Dan Pink’s analysis for such schemes? Can companies assume that the more points they hand out, the more customers they’ll attract?

The answer may depend on how well the reward system is designed. To work, reward structures have to be carefully planned, customized and implemented. Just slapping points and leader boards on everything that clicks can actually damage a brand. If badges are too easy or too difficult to obtain then users get bored or frustrated. If a points system can be easily gamed then less-loyal (dishonest) users are rewarded over loyal (honest) ones. Plus, users engaged in creative tasks may feel patronized / irritated/ homicidal if forced to work using a cute, bug-eyed avatar.

So far, very few gamifiers have addressed Dan Pink’s evidence on the dangers of relying on rewards as motivators. As companies start applying gamification to more complex, creative tasks the question is, will virtual dollars be any better than real ones at encouraging productivity?

  • Jason

    What’s interesting is that often the game involves getting positive or negative feedback from the other users. In many crowdsourcing sites users often don’t realize that their reward is based on their social status within the group more than the amount or quality of contribution.

  • Mark Fidelman

    I disagree with Pink in part. He’s not taking culture code into account. You can see a rebuttal from me here: