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Why Do Bonuses for NPS Scores *Seem* Wise?

Jim Tincher Jim Tincher 07/09/2021

I’ll get right to the point: Change management is cheaper than bribing employees. It’s more effective, too.

The CEO of a client organization recently asked us about offering a bonus tied to their Net Promoter Score (NPS). He believed that this would motivate employees to think more about customers and improve their experience.

Without mincing words, I told him I thought that was a terrible idea – one that is universally frowned upon.

He pushed back: “Why? What’s the evidence? Other organizations are doing it. Why is it so bad?”

I’ll admit that these questions caught me by surprise. The answers seem so obvious that I never truly considered the issue. And outside of the “used car salesperson” example, where the argument is made that employees will game survey results, I don’t know that there really is a lot of hard data on the topic.

However, there are a ton of opinions about the practice, and many companies (including most of our clients) do it.

Getting to the heart of the matter

I decided to ask my LinkedIn connections to explain this disconnect, where thought leaders universally say that paying employees for improved survey scores is a bad idea, yet so many companies are doing it.

Are thought leaders right, and those companies are making bad decisions? Or are companies right, and the “damage” caused is minor and offset by the gains of saying a focus on customers (represented by survey scores) warrants investments in bonuses?

Unfortunately, most of the responses didn’t address my core question. Instead, respondents shared their viewpoints as to whether companies should or should not provide these bonuses, as well as their specific advice.

I would love for someone to try to collect the data on whether a company pays these bonuses and what impact doing it or not doing it has on their survey scores. My suspicion is that there won’t be much difference, but we don’t have the data to prove or disprove that at this point.

So until then, here’s my own analysis for why this disconnect exists:

Intuitive benefits

Behavioral economics shows us that incentives work. When properly incented, whether with pay or recognition, people’s behavior changes.

When I was with Best Buy, any metric put on the scorecard – product warranties, reduced shrinkage, accessory sales, you name it – showed improvement, even without direct payments made to employees. Eventually, the scorecard included so many items that it lost its impact.

Regardless, incenting for activity works in many situations.

Hidden downsides

Gaming – for example, manipulating who receives surveys or what their responses are  – is a common concern. Beyond asking for a top score, teams can delay negative communications until after a survey. Or they can accelerate positive communications so that they hit during the survey. In most cases, this gaming is subtle – so subtle that executives don’t see it, so it doesn’t factor into their decision-making.

Also, if incentives lead to bad short-term behaviors, it’s difficult to link that back to the bonus program. If teams, for example, push out flawed products just before the survey goes out in order to meet a client’s deadline, the connection will be even harder to find.

For more on this topic, read Part 2 of this post, where I discuss how to prevent gaming and offer a better way to incentivize employee behavior to achieve your actual goals. (I’m pretty sure they’re not survey scores!) 

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