Study reveals surprising way to motivate digital gig economy workers

When it comes to motivating app-based gig economy workers like DoorDash and Uber drivers, giving out money and virtual high fives are separately effective — but not when given together — according to new School of Management research.

Forthcoming in Management Science, the study found that both monetary and non-monetary incentives — such as digital badges for doing a good job — increase participation from gig economy workers when offered separately. But when offered at the same time, the effects of the monetary incentives are diminished, rather than enhanced by the non-monetary rewards.

“Combining verbal recognition with bonuses to motivate workers is an intuitive idea; but such combinations can be counter-productive in the gig economy,” says study co-author Ram Ramesh, professor of management science and systems. “Coming from the lower end of the earnings spectrum, gig workers feel shortchanged when a pat on the back is given instead of more financial rewards.”

To test different incentive structures, the researchers conducted 12 micro-randomized field trials in collaboration with a major on-demand platform that explored how different combinations of monetary and non-monetary incentives impacted the participation levels of gig workers.

In addition to their discoveries about the timing and positioning of incentives, the researchers also found that framing these incentives makes an impact. Unlike in traditional employment settings, positioning incentives as potential losses — a practice known as “clawback” — increases the effectiveness of non-monetary rewards but has no significant effect on monetary rewards. A clawback is like telling a worker, “If you don’t do your tasks, you might not get your reward.”

Ramesh explains that recognizing how different incentives are perceived by workers can help platforms tailor their approaches, potentially leading to increased satisfaction among workers.

“Because digital gig workers interface with an app instead of a manager, these platforms strip away the interpersonal elements of management, pushing gig workers to view their relationships with gig jobs as purely transactional,” says Ramesh. “As the gig economy continues to grow, understanding the subtle nuances of how incentives impact worker behavior will be crucial for the sustainability of these digital platforms.”

Ramesh collaborated on the study with Niam Yaraghi, associate professor of business technology in the University of Miami Herbert Business School and a non-resident fellow of the Brookings Institution, and Giri Kumar Tayi, professor of information systems and business analytics in the University at Albany Massry School of Business.