Money is the Worst Incentive

The most typical motivation plan is to reward top performers and ignore everyone else. It is common knowledge that if you want something done at work, offer a bonus!
The problem is that this commonly used technique for motivating employees does not work! Senior management may be notorious for offering cash incentives in an effort to encourage (or manipulate) us to do more but, it turns out, we are not as manipulable as some bosses think we are.

Dan H. Pink, a leader in motivation, work and management, explains that the way we think about cash bonuses is backwards from what we would expect. Interestingly, studies show bonuses actually de-motivate workers instead of encouraging them. In a clever RSA video Pink explains how rewarding top performers causes worse performance and that when employees are paid enough money, it is possible to incentivize them using other, far more successful, techniques that result in increased engagement and loyalty.

In his video, Pink lists three things that actually do lead to better performance:

Autonomy: the desire we all share to direct our own lives. There is proof that the more autonomous we feel at work the higher the levels of employee engagement will be.

Mastery: We all want to get better at something. This is why some of us use our free time to learn how to play the guitar or study photography; we aspire to learn a new skill or craft for the pleasure and satisfaction.

Purpose: we all want to feel like we are making a contribution. If money and profits matter without a sense of purpose bad things happen. Service becomes lame, products are bad and work becomes uninspiring.

Similarly, an HBR article reported results which showed conclusively that people who expect to receive a reward for completing a task, or for doing that task successfully, simply do not perform as well as those who expect no reward at all.
What they discovered was the more cognitive sophistication and open-ended thinking that was required, the worse people performed when working for a reward. ‘The surest way to destroy cooperation and, therefore, organizational excellence, is to force people to compete for rewards or recognition or to rank them against each other’.

Money was the focus of a recent Insightlink article that also concluded that money was not a primary motivator. The article highlighted that, ‘Although salaries are important, our work demonstrates time and again that intangibles such as trust, respect, the opportunity to learn new skills and recognition are even more important in motivating employees to give their best’.

With this kind of evidence our bosses need to stop and re-think financial bonuses since they may be the worst possible way to motivate us.