A Vermont company—AllEarth Renewables—found a unique way to motivate its employees to reduce their energy usage.
Historically, the firm offered employees incentives for reducing their driving and household energy usage. Now, as an alternative, they give each employee a $6,000 annual allowance for energy and the employee gets a cash bonus based on whatever portion of the allowance they do not spend.
Preliminary reports suggest the program is doing exactly what the leadership intended—it is motivating employees to make changes.
We thought the program was brilliant.
While the report about the effort suggested employees were motivated by rational economics—that the potential for a bonus coupled with cash savings from using less spurred people to action—we think the reasons for high participation are a little more complicated. After all, this is not the first time these employees had access to incentives that reduced the payback period for being more energy efficient. This company operates in Vermont—home to the most comprehensive energy efficiency program in the nation—so these employees have had other offers.
And yet it was this offer that inspired action. Employees got rid of inefficient vehicles, started carpooling and made improvements in their homes.
First, in modifying the program, the company reframed an offer to help employees save as an opportunity to avoid a loss. That is significant. Social scientists tell us that humans are loss adverse, meaning that we will go to extremes to avoid losing something we had. In this case AllEarth Renewables tells each employee that he/she has a $6,000 bonus and that they get to keep whatever is not spent on energy. As the weeks pass employees watch their money disappear for utility bills and fill-ups at the gas pump. Indeed, it is ideal if employees are thinking something like: “Month 1 and I’m already down $450…at this rate I will not see any of my bonus.” The more attached an employee is to the bonus funds the more likely they will act to preserve their bonus, avoiding loss.
And that is the first reason why this effort is brilliant.
Cool Choices staff also thinks it is brilliant that AllEarth Renewables is making this offer to its employees because we think work settings are enormously powerful communities. AllEarth management conveyed its priorities to employees by setting up this program, which will inspire some action. More, though, employees are going to be motivated by watching their co-workers. Hearing that “Jeff” in accounting is on track to get $1,500 of his bonus because he is biking once a week will motivate Amy and Jill to take action as well. And that will inspire yet more actions. Public affairs director Andrew Savage was quoted saying:
The exciting thing is that as soon as we launched the program, everyone was strategizing in the office and in the lunch room about how to get the biggest bang for the buck, and how they could help each other.
We believe AllEarth Renewables is on track to transform its culture into one where efficiency and conservation are the norm. And we salute their innovative efforts.