Professor Nava Ashraf, an associate professor at Harvard Business School, gave a PONPO lecture at SOM in the fall of 2010. She began her remarks by flipping the traditional logic underlying many social projects on its head: “If you don’t provide people with a margin, they won’t have a mission.” In other words—and contrary to the usual practice among nonprofits—individuals perform better when appropriately incentivized even for mission-driven work, particularly in resource-poor settings.
Ashraf described her recent research into the distribution of female condoms in Lusaka, Zambia’s capital city. In this field work, Ashraf tackles a problem faced by social enterprises globally: how to structure incentives so that the most qualified, effective agents are motivated to successfully do the work. Specifically, Ashraf designed an experiment to test various incentive structures – financial and otherwise.
New efforts by Zambia’s Ministry of Health provided a perfect setting for Ashraf’s experiment. Female condoms are a new product in Lusaka, and adoption rates are greatly improved when health care workers can provide personal follow-up. But in Lusaka, where there are fewer than seven doctors for every 100,000 people, health care employees already are overburdened. Ashraf and the Ministry therefore identified an unusual neighborhood intermediary for distribution of birth control —barbers and hairdressers. Lusaka’s thousands of salons provided an excellent setting for persuading clients to try the female condom since many salons already sold small convenience goods, and the experience at a salon was typically both personal and long-term.
After receiving training in HIV prevention, proper application of female condoms, and basic business skills, all participants began to promote the product to their clients. Ashraf divided the hairdressers and barbers at the 1,200 salons into four treatment groups: 1. Pure volunteers without profit incentives (buying condoms from the government and selling them to customers at the same price), 2. Vendors with low-gauge financial incentives (10% of the sales price) 3. Those with a high-powered financial incentive (90% of the sales price) 4. “Status” members who received no monetary compensation but tracked sales with a giant, colorful thermometer poster. The “status” members would be recognized in a public ceremony hosted by a popular radio DJ if they met their sales goals.
Ashraf’s research concluded that the individuals in the “status” treatment sold at least twice as many condoms as those in any other treatment group. Therefore, financial incentives were not viewed to be as effective as public recognition rewards in this study. Ashraf also highlighted other important results: individuals with higher education levels were more likely to respond to the status treatment; scores on “entrepreneurial” qualities predicted condom sales reliably; and the amount individuals gave in an anonymous, pre-treatment “donation game” was an enormous predictor of sales performance.