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WARNING – Higher Incentives May Lead to Worse Performance!

By Martin Fox.

“‘If… then’ rewards, the things around which we have built so many of our businesses, DON’T WORK!”  In fact, in those types of activities, tests showed that “higher incentives led to worse performance.”

While on vacation in Washington, D.C., I enjoyed two wonderful tours at the Library of Congress and the Kennedy Center for the Performing Arts.  What made these tours so great was not the magnificence of the buildings, nor the history associated with them; it was the passion displayed by the tour guides who led our groups 

Remarkably, these tour guides were unpaid docents who did their jobs out of a desire to share their love of their subject with others.  As I reflected on what made these tours so memorable, I realized that both of the docents were motivated by a passion to:

  • Educate and inform – they provided a lot of information to make our experience worthwhile.
  • Inspire us – they wanted to motivate us to have a perspective beyond ourselves.
  • Encourage our personal involvement – they wanted to kindle a desire inside of us to take action.

A few days later, I was introduced to a presentation by Daniel Pink, the author of the soon-to-be-published book, Drive: The Surprising Truth About What Motivates Us.

In the presentation, he makes the statement that was made at the beginning of this piece, i.e., that when it comes to complex or creative tasks, performance incentives don’t work.  He supports his assertion with several tests showing that, in fact, performance actually declines in certain types of tasks.  Yet, in business, we go on building performance initiative systems based on the belief (no… the KNOWLEDGE) that these rewards are effective at improving performance.  As Mr. Pink says:

“There’s a mismatch between what science knows and what business does.”

Instead, science shows that workers in these complex or creative jobs are motivated by three things:

  1. Autonomy – the urge to direct their own lives,
  2. Mastery – the desire to get better and better at something that matters, and
  3. Purpose – the yearning to do what they do in the service of something larger than themselves

This is not to say that money is unimportant; in fact, he begins with the premise that people receive a fair base pay.  However, these intrinsic motivations (satisfaction in the work itself) are far more critical than extrinsic motivations (rewards) when it comes to improving performance.

In survey after survey, employees in these types of jobs show that they want:

  • Challenging work
  • Meaningful work
  • Involvement in the outcome
  • Direction over their own work
  • Feedback on their performance

In many ways, these are much more challenging to manage than assigning monetary rewards to outcomes.  It is the challenge of management, though, to create the type of environment that motivates people to work beyond even their own expectations.

Watch the video yourself to gain a better understanding of the science behind motivation.

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