Management & Organization

Rewards damage your (employees') results

In several companies it's normal practice that the company's CEO receives a large bonus when things are going well. The purpose is, of course, to motivate the CEO to bring his best performance. But research shows that monetary rewards doesn't really have the desired effect. In fact, monetary rewards have the opposite effect on us. We become less motivated, less creative and perform worse.

“This sounds strange”, you may think, because “this is what we've always done, and who wouldn't enjoy more money?” You're far from the only one thinking this, and as you might expect, the claim has been tested over and over.

One test is the so-called “candle problem”, which Professor at Princeton Sam Glucksberg conducted in 1962. In the test, the test subject has to attach a candle to the wall, so that it does not drip wax on the table. To solving the task two groups of test subjects received, besides the candle, a box of thumbtacks and a box of matches. The solution is to use the box to hold the candle. He told half of test subjects that the test was being timed to establish a standard time. The other group was told that if they were among the fastest 25 %, they would earn $5. The fastest would receive $20.

So what happened? The group that was promised a reward for being the fastest were actually slower in completing the test. In fact, it took them, on average, three and a half minutes more than the group who weren't promised a reward.

Why did this happen? Why did the promise of money make them slower problem solvers?

It is actually quite simple. Rewards and the threat of punishment acts as a form of blinders. Many solutions to complex problems are found at the edge of our field of vision. When we're promised a reward for solving a problem, we are only capable of seeing the solution that is right ahead of us.

Candle Light Problem

Let go of both carrot and stick

The author of “Drive: The Surprising Truth about What Motivates Us”, Dan Pink, identifies bonuses, raises and other external rewards and punishments as “if-then” rewards: “If you do this, you will get that”.

The reason that these “if-then” rewards are still being used, even though research has proven that it does not work a long time ago, is that it worked well before. As with many other types of management- and business phenomenons the reward and the punishment method was developed during the industrial revolution. However back then it was a lot easier to motivate people, because their work assignments typically came down to pressing a button or pulling a handle. And with simple well-defined assignments the “if-then” rewards do just fine. Today where most work assignments require creativity, critical thinking and problem solving, the “if-then” rewards are in fact demotivating and obscuring for our achievements. Even though the industrial revolution occurred a long time ago, some of the methods from back then still sticks.

So unless your coworkers still pushes buttons and pulls handles, you will do wise in creating a company where external rewards and punishments; different bonuses and threats of firing, are relieved by an environment that supports an entirely different type of motivation: Inner motivation.

Be open, interested and acknowledging

The idea that there are two types of motivation originates from Self-determination Theory. One is called external motivation, which is created from outside rewards: Bonuses, salary etc. The other is called internal or inner motivation and comes from “within oneself”. When you do something because it is fun, interesting or because it supports one of your personal goals, you are inner motivated. Like Glucksberg, Richard M. Ryan and Edward L. Deci, who created Self-determination Theory, believes that inner motivation is the way to motivated and productive coworkers.

They have identified three types of needs that must be present in order to make inner motivation possible:

  • The need of feeling competent

  • The need of feeling self-determining

  • The need of being in relation with others, so feel that we belong

When you want to motivate others, you have to stimulate these needs. And then forget about controlling your coworkers and making them “do what you want”.

Threats, rewards, demanding language and criticism creates situations that makes the recipients feel incompetent and subject to another person’s will. But what we as people are in fact motivated from is acknowledgement and the sense of having a choice. That is why it is about offering people a choice and being open, interested and acknowledging, explains Edward L. Deci in an interview.