Here are two conventional beliefs we seem to hold in work, and possibly in life in general:-
- If you reward something, you get more of the behaviour you want
- If you punish something, you get less of the behaviour you don’t want
They are the foundations of many Performance Management Systems (PMS) in organisations; good behaviour is equated with bonuses and other rewards, poor behaviour leads to Performance Improvement Plans, sanctions and disciplinary action, and ultimately dismissal. Many of us have experienced the good and bad of PMS.
There is an interesting body of work that challenged these beliefs. Funded by the US Federal Reserve Bank, four leading economists from three of the leading US universities conducted a study undertaken by students from the Massachusetts Institute of Technology (MIT). The study caused them to question the findings as they ran so counter to conventional wisdom.
The students were asked to complete a variety of challenges such as memorising strings of numbers, solving crossword puzzles, completing tasks to test spatial ability, and undertaking physical tasks such as throwing balls into containers. They were offered three levels of reward for achievement at different levels of performance. Those who did pretty well would receive a small financial reward; those who did better earned a medium financial reward; those who did really well would get a cash prize of $50. Sounds like the basis of most PMS – reward the top performers well and provide minimum rewards at the bottom of the scale.
Here’s what the economists found.
– As long as the task involved only mechanical skill to determine the level of success, higher rewards produced better performance.
– Once the task called for even rudimentary cognitive skills, a larger reward led to poorer performance.
The economists were troubled. Maybe the study was flawed because the financial rewards offered were insufficient to determine the performance of relatively well-off American college students; maybe $50 was insignificant. They decided to eliminate this “wealth factor” and conducted a similar study in rural India. This study also used three levels of reward – a sum equivalent to one week of average pay at the lowest level, reward of two weeks in the middle, and a pot of one month’s pay for the highest levels of performance.
You may have guessed what they got – exactly as at MIT. Where the task was purely mechanical, higher rewards produced higher performance. Where any cognitive skills were needed, higher rewards produced poorer performance. The same basic study has been replicated time and again, whether conducted by economists, psychologists or sociologists, producing the same conclusions. For simple, straightforward tasks, rewards increase performance in a pretty linear fashion – higher rewards equals higher performance. When a task is more complex and requires conceptual, creative thinking, these kinds of motivators just don’t work.
I am not trying to argue in this post that pay and financial rewards are irrelevant in influencing performance at work. The point is to pay people sufficient that they are not constantly thinking about pay; to take financial reward out of the equation so that they can focus on the work rather than financial rewards.
A subsequent post will cover some interesting research about work performance and will reveal what really motivates us to perform at work, identifying the three factors that lead to better performance and personal satisfaction. The three factors might surprise and excite you. I hope they do.