Thursday, January 7, 2010

Workin' BAD for the Money

According to an MIT study (and several others) dangling the carrot doesn't work - more reward, more mulla, actually inhibit creativity and productivity. In his latest book, DRIVEN, Daniel Pink discusses the new operating system we should all be considering as we enter the age of right-brain economics.

Here are three main points Pink discusses in a fantastic talk at TED:
1. There is a mismatch between what science knows and what business does. MIT, The London School of Economics, and several other institutions have conducted experiments proving that what companies do to motivate their workforce does NOT work.

2. Increasing incentive (offering more reward or money) decreases performance. At least when the work involves some thinking and creativity. Incentive does help improve performance when it comes to simple, mechanical tasks - but that's not really the bulk of what we deal with, anyway. MIT conducted an experiment. If you ask two groups to solve a problem. The group offered incentive to solve the problem faster will perform less well than the other.

3. Meaning, Autonomy, and Mastery are the currency that motivate workers today. Sure, getting paid a fair wage is VERY important. But the work has to mean something to the worker. Give your employees some sense of control. For example, Google lets its workers spend 20% of their time on anything they want. It's from this free time that 50% of Google's innovations spawn - like GMAIL.

Anyway, you can watch Pink's video and read his books for the sources and research.

But here's my two cents on why this happens. Which, perhaps Pink goes into in his new book but since I have only seen his TED conference video, forgive me if I think I'm being original here.

I believe that rather than see the reward as a reward, a worker actually sees it as a potential LOSS. Meaning, "If I don't do this fast enough, I'll LOSE the $20 bonus I can receive." The effect of narrowed thinking is what happens when one experiences negative emotion and fear (Fredrickson, 2009). I bet that it's fear of loss versus motivation to win which causes the less-than-effective thinking.

Barry Schwartz, author of the Paradox of Choice, gave us a lecture the other day about human beings actually put more weight into potential loss than potential gain. We'd rather NOT LOSE than gain something. This is called prospect theory. It constantly affects the way we make decisions. Sometimes, the way something is framed - can affect our interpretation of it as a potential loss or a potential gain. Here's an example Schwartz included in his presentation:

Imagine yourself having just been given $500. Which of these two possibilities would you prefer?

[A] A sure loss of $100

[B] A loss of $200 with probability .5, and a loss of $0 with probability .5

Most people answer choose [A]. Because it sounds like less of a loss. But you're more likely to come out on top if you choose [B].

Lastly, time pressure and performance pressure does impact performance, so I'd like to look further into the research to learn what factors they controlled for in making this big claim to fame.

Much love,

For more info read Driven, by Daniel Pink, and The Paradox of Choice, by Barry Schwartz.

You can watch Dan Pink's TED talk here:
Dan Pink on the surprising science of motivation | Video on

You can watch Barry Schwartz giving a fascinating TED talk about choice here:
Barry Schwartz on the paradox of choice | Video on

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