One of the most counter-intuitive studies EVER on motivation came out a few months ago from MIT. At first glance, it’s just bizarre. But the more you think about it, the more powerful, and sensible, it becomes.
Economic researchers gave subjects a set of challenges with three levels of rewards. If you did pretty well, you got a small monetary reward. If you did a little better, you got a moderate cash reward, and if you did really well, you got a large cash prize.
You would think the result was obvious: the prospect of the largest reward leads to the best performance. And in most cases, you’d be wrong.
The actual results were fascinating. As long as the task involved nothing more than mechanical skill, rewards worked as you would expect. But once the task called for even a little bit of thinking or creativity, the larger reward caused performance to go down. When people got the highest compensation, their subsequent performance became the worst of ALL.
What?! On the surface, this goes against everything we thought we knew about motivation. But as always, the devil is in the details. For example, you can’t cut salaries to the bone and expect productivity to zoom. The MIT researchers put it this way: you have to pay people enough money to take the issue of compensation off the table. But after that point, for jobs that require any degree of thought, other things are far more important than money. Autonomy is one. The opportunity to grow and master a skill is another. And a sense of purpose rounds out the top three.
So if your company has been using the economy as an excuse for lousy productivity and dismal employee engagement, it’s time to wake up. This is your chance to steal the candy from the other guys who are hunkered down, weathering the storm.
Is your company’s incentive system tied to the wrong horse? What can you do to fix it, and QUICK?