Workers respond more to peer pressure than they do to higher salary or bonuses

Peer pressure can do a lot. In 2014, top Uber executives, including CEO Travis Kalanick and VP of business Emil Michael, went to an escort karaoke bar for businessmen in Seoul, South Korea, according to what Gabi Holzwarth, Kalanick’s ex-girlfriend, told The Information. At this bar, the workers wore mini-skirts and numbered tags, because they were paid escorts.

Holzwarth said four male Uber managers picked the woman they wanted by calling out the worker’s number, which would prompt the woman to sit by them. Holzwarth said she left with Kalanick after an hour, so she did not know what happened next, but the expectation, since it was an escort bar, is that the Uber workers would sing karaoke with the women and then go home and have sex.

But one of the managers present was an unnamed woman and she was “visibly unhappy” with what was happening and left. According to Holzwarth, the woman later told her, “I…didn’t know what was going on until [w]e got into that room…the response I got from another male coworker was, ‘Well, that’s how Korea is.’”

When the woman later filed a human resources complaint about what had happened, Kalanick said he believed that the female manager “must have a lawyer and wan[t] something” for her to not come forward sooner with her complaint.

The complaint from people who learned about the case: Kalanick’s presence at the escort bar amounted to implicitly approving the behavior, enforcing pressure to participate.

Peer pressure, not money, turned a one-time action into a daily habit

There’s a reason that incidents like those at Uber get people talking — even three years later. How people behave around us is a huge predictor of how we decide what the universe of acceptable behavior is at work.

A new Harvard Business Review study confirms that peer pressure can enforce workplace behaviors in ways that money can’t. HBR looked at the different ways a California hospital enforced a hand hygiene campaign for its workers. Hospital employees who completed the target level of cleanliness got a one-time bonus of $1,200.

The campaign organizers wanted to encourage physicians to participate in the campaign but couldn’t use a monetary incentive because doctors weren’t technically hospital employees. So instead, these doctors got peer pressured into participation through public callouts posted on a wall and emails that celebrated doctors who were sanitizing their hands. The chief nursing officer would even send physicians “love notes” that stressed the importance of each doctor’s participation for the collective goal to work.

After the 90-day campaign was over, the hospital employees who had gotten bonuses saw their hygiene progress regress in the absence of a monetary reward: they stopped washing their hands when they didn’t get a bonus for it any more.

Meanwhile, the physicians, who received no money but plenty of social reinforcement, showed slower improvement but their changed behavior persisted long after the campaign was over.

Why peer pressure is so effective when money isn’t

The researchers found that money made good behavior transactional: as long as the money kept coming, good behavior would follow.  When the money ran out, so did the behavior.

Academics call this the “crowding-out” effect where extrinsic motivators like money reduce secondary motivators like helping the common good. For an ancient example of this theory, consider the Biblical belief that one “cannot serve two masters.

This doesn’t mean that you should never use money as an incentive. But this case study reminds us that when you introduce money into the equation, people may not be able to remember why you wanted to create the workplace change in the first place, only able to see dollar signs.

Peer pressure doesn’t always work, however

And sometimes, neither peer pressure nor money will work as silencing incentive when your mind is set.

Uber’s VP of business Emil Michael knew that the karaoke-escort story may get leaked amidst mounting allegations of Uber’s sexist, abusive workplace culture. Michael contacted Holzwarth, instructing her to say they only had a “good time” if the press asked, and Holzwarth refused. In fact, Holzwarth, said she would not have come forward publicly if Michael had not attempted to “silence” her with his peer pressure.

“I’m not going to lie for them,” she told The Information, describing Kalanick as “part of a class of privileged men who have been taught they can do whatever they want, and now they can.”

That idea doesn’t tell the whole story, however: all workers, whether men or women, are taught they can do whatever they want only when others around them are taught that too.