Dan Pink shines scientific proven light on what drives us – intrinsic motivation or extrinsic incentives?
Mismatch between what science knows and what business does
Imagine I have a great business idea and would suggest you the following business model. I would work with a group of people from around the world who do highly skilled work. They are willing to do what they are doing for free and volunteer their time, sometimes 20 or maybe 30 hours a week. In addition, whatever they create, they don’t sell it, but they would give it away for free. Before you read on, would you think that this business model could work? Would you think that this model could produce any useful solution at all? Would you think that the people working in that model would be motivated enough to overcome the challenges they face?
Well, if you are skeptical it should not be surprising, because that is not how business is commonly operating today. Our assumption is that we have to motivate people with the carrot and fear them with the stick. We have to pay them incentives so that they get their job done and punish wrong behavior to achieve control. But how come that projects like Wikipedia, Mozilla or Linux are possible, where people offer their skills for free and give away their solutions?
Three problems for extrinsic motivation
The challenges we face in the majority of jobs in Western Europe are not straightforward. We cannot simply follow a set of established instructions down a single pathway to one conclusion. We mainly face heuristic tasks, where we have to experiment with possibilities and derive a novel solution. Routine, algorithmic tasks are disappearing. Tasks become more complex and involve more creativity, making work more enjoyable. The chances of being in flow at work are increasing. The joy of the task becomes its own reward, making extrinsic rewards and punishments obsolete. Moreover, our behavior cannot be easily predicted. Humans are no homo oeconomicus, rational wealth maximizers, but irrational purpose maximizers. Further on, the way we organize work becomes more open source and new organizational forms emerge, that operate according to the words of Muhammad Yunus, where the profit-maximization principle is replaced by the social benefit-principle.
More harm than benefit through rewards
In these environments, where people are intrinsically motivated to do their job and which involve at least rudimentary cognitive skills, external if-then rewards can actually be harmful. But also in general rewards often create more of what we don’t want and less of what we actually want.
Let me give some examples. Rewards can turn work into play, but most often it works the other way round. Artists that work on commission are less creative for example. Straightforward, if I do that, then I get this (if-then), rewards lead to less intrinsic motivation for a task and worse performance. If you have turned a hobby into a job that you get suddenly paid for, you might have experienced the lower interest in that specific activity. We will only do what we get paid for and not more, only complying with what was expected of us.
Quarterly earnings are an obsession in many organizations
Rewards, especially short-term goals that lead to high payoffs, can also lead to less ethical behavior and short-term thinking. In order to reach goals imposed by others, like sales targets, people are taking the shortest way to reach that goal, willing to cut corners and take the low road. This has become most visible during the financial crisis where bankers received bonuses for selling mortgages. Worst of all, rewards can cause addiction. Once we have reached that goal, we need to fulfill it again sooner. This also means that once we paid a reward for an activity, we need to pay even more the next time to get the same result. The receiver is never going to do the activity for free again.
“Several researchers have found that companies that spend the most time offering guidance on quarterly earnings deliver significantly lower long-term growth rates than companies that offer guidance less frequently.”
Taking the issue of money off the table
“People have to earn a living.”
There needs to be a certain baseline reward in place that ensures people can make a living from their salary. If this threshold is not met the focus is on unfairness of situation and anxiety of circumstances. There is simply no motivation at all. The best case is to take the issue of money off the table.
When rewards work
“When the reward is the activity itself – deepening learning, delighting customers, doing one’s best – there are no short cuts. In some sense, it is impossible to act unethically because the person who’s disadvantaged isn’t a competitor but yourself.”
Rewards work best with routine tasks that require mechanical skills. The routine task could be enhanced with a reason why it is important, acknowledging that the task is boring and showing empathy while at the same time explaining why in this situation a reward is used, as well as allowing people to work in their own way.
For complex tasks rewards should be used with care. Unexpected “now-that” rewards deliver the best result. Now that we have achieved this outcome, we get a reward. Most useful are non-tangible rewards in the form of hones appreciation of work and positive, meaningful feedback, which is specific to the task and person and praises the effort and strategy.
From compliance to engagement
Rewards may create short-term compliance, but in the long term they harm our intrinsic motivation to do a certain task. Using rewards in business has led to disengagement and low identification with the daily tasks we do. But science has not only showed the negative effect of rewards, it has also offered a solution for collaboration and engagement.
Intrinsic motivation, our curiosity and interest is part of being human, but the emergence of it depends on our supporting environment. There are three innate psychological needs that we have, and which make a social system sustainable.
“People oriented toward autonomy and intrinsic motivation have higher self-esteem, better interpersonal relationships, and greater general well-being than those who are extrinsically motivated.”
“Hire good people and leave them alone.” – William McKnight
Why hiring experts and then telling them exactly what to do? A similar question must have crossed the inventors of the results only work environment (ROWE), where only a specific goal to reach is defined in a consensus decision. Reaching that goal is, however, not bound to compensation. People are left with autonomy about what they do, when they do it, how they do it and whom they do it with. These are the four T’s of autonomy:
The result of these results only work environments is increased productivity and declined stress levels of individuals, because actions with choice increases individual performance and attitude.
“The course of human history has always moved in the direction of greater freedom.” – Richard M. Ryan
“In autotelic experiences, the goal is self-fulfilling, the activity is its own reward.”
Our capacity for learning allows us to become better and better at things that matter, which is a satisfying feeling. To overcome the challenges which will present themselves on our way to mastery we need to take on a growth mindset. That means through hard work and learning we can improve our abilities. In addition we need to have grit, which could be described as the perseverance and passion to achieve long-term goals. Our urge to master something new and being engaged with it is the best predictor of productivity.
It is most fulfilling to work on a cause that is larger than ourselves and to give something back to the community. We need to work and spend our time on what is most meaningful to us. Ideals such as honor, truth, love, justice, beauty become more and more important in today’s economy and organizations.
How do you reward your employees?
Dan Pink’s book Drive answers the classic question about motivation. Do we need external rewards or punishments or are we internally driven? Dan builds on research from the last 50 years, most of which has surprisingly been ignored in the business world. He has a talent for storytelling which makes the book easy to read.