Hey, Watch Where You Point That Thing!

In a previous post, Coffee’s for Closers, we explored how monetary incentives can be used strategically to change human behavior if you know exactly which behaviors you want to impact and how.  The challenge is that many aspects of business requires a bit more sophistication than saying, ‘If you do x I’ll give you y.’ 

In a recent TED talk ‘The Surprising Science of Motivation,’ career analyst Dan Pink concludes that monetary incentives only produce the desired outcomes for simple mechanical tasks.  For tasks that require creativity, it has been proven that offering incentives is the worst thing you can do.  This seems to defy to common sense… until you think about it more carefully.

Despite claims to the contrary, rewards are motivating.  They motivate people to change their behavior if the link between the behavior and the reward are clear.  Unfortunately, although rewards can impact behavior, they have no control over outcome. 

In a behavioral experiment, two teams were asked to solve a tricky problem.  One team was offered a reward, the other team no reward.  The team that wasn’t worried about losing their reward solved the problem faster.  It turns out that rewards can create undesired results precisely because they are motivating.  In other words, they narrow your focus and block creativity, and the higher the reward the more dull and uncreative your thinking becomes.

Does this scenario ring a bell?  Company A defines employee goals around customer satisfaction with rewards for specific behaviors, such as resolving customer issues, etc.   Once the goals have been communicated, some employees employ various misleading strategies such as opening two issues instead of one so it looks like they’re solving more issues, or closing issues that haven’t been properly resolved.  Others spend company time documenting everything they did that is tied to a reward. 

Customer satisfaction may improve, at least in the short term.  The problem is that most of these employees are jumping through hoops for extra cash rather than thinking creatively about how to improve customer satisfaction. 

Maybe that’s what you want.  But if you want employees to solve problems creatively, tying rewards to specific goals or behaviors can undermine the results you want to achieve. 

So, if money isn’t a reliable motivator for creative work, what is?  One of the most effective motivators seems to be autonomy.  Which makes perfect sense, since creativity requires room to stretch one’s mental muscles and experiment with new ideas.  Let’s face it, no matter how one feels about self-directing employees, it’s hard to argue that micromanagement is better for creativity than autonomy.  Or that creativity is something you can command at will with the right pay for performance solution.

Here is Dan Pink’s advice to motivate creative employees: Pay fair and adequate salaries so that the money issue goes away.  Give people autonomy and time to work on cool stuff.  Be excited about the cool stuff. 

In other words, pay for potential, celebrate performance. 

This sounds like excellent advice for fostering creativity, excitement and a shared sense of purpose.  However, I don’t think we’re off the hook yet when it comes to rewards.  No matter how much people enjoy 'Pet Project Fridays,' they will at some point insist on a real share in the prosperity they help create.  

The question is, how to reward them in ways that don’t block creativity. 

What do you think?

Laura Schroeder is the Product Manager for Compensation Solutions at Workday, headquartered in Pleasanton, CA.  She has more than twelve years of experience designing, developing, implementing and evangelizing Human Capital Management (HCM) solutions in the US, Asia and Europe.   Her articles and interviews on HCM topics have been published in national and European trade journals.  She currently lives in Munich, Germany and enjoys reading, writing and spending time with friends and family.  

Comments

[Derek Irvine, Globoforce]

I, too, enjoyed Dan's video on TED. Your point in this post about inadvertently encouraging deviant behavior is an important one. I blogged about this, but the upshot of my post was that to avoid this, you must tie recognition to behaviors that reflect the company values in achievement of strategic objectives. This approach ensures employees who, for example, increase productivity but do so by harming the environment will not be rewarded for their efforts. Values-based recognition is the key to ensuring employees display the right behaviors in achieving the company goals.

More on this and research out of Singapore Management University on the topic available here: http://globoforce.blogspot.com/2009/07/self-esteem-sabotage-and-psychic-income.html

[Laura Schroeder]

Thank you for commenting, Derek. I agree it pays to be more careful about how you formulate goals AND how you reward behavior. Also, I love the term 'psychic income' and hope to see it more.