Question

Subject: Money and Motivation

In TED Talk, The Puzzle of Motivation, Dan Pink, (Check out unsuccessful lawyer Dan Pink, who suggests we re-think how we run our businesses. His analysis of research in the psychology of motivation, rewards, incentives, and results-oriented work might surprise you.)

Initially Dan talks about a couple of studies that were carried out by top economists at MIT. The first study was carried out at the university, they took a group of students and gave them physical and mental tasks and rewarded them depending on how successful they were. If the group did ok they got a small reward, it they did well they got a higher reward, and if they were really successful they got a big reward.
The results were surprising and freaky, here's what they found out. Firstly, as long as the task only involved mechanical skill, bonuses worked as expected. The higher the reward the better the performance, that makes sense. But when the task called for some conceptual, creative thinking, even rudimentary cognitive skill, a larger reward led to poorer performance. Something that seems to defy the laws of behavioral physics.

The group that finance the research was the Federal Reserve Bank. The results were so freaky they decided to test their findings somewhere else where the monetary rewards were more significant to the participants. So they replicated the experiment in Madurai, India. And this time around the participants who were offered the top reward did worst of all. Higher incentives lead to worst performance. But money IS a motivator at work. If you don't pay people enough they won't be motivated and you will get poor performance. There is another paradox which says the best use of money as a motivator is to pay people enough so that you take the issue of money off the table. Once you do that there are 3 factors that lead to better performance and personal satisfaction; autonomy, mastery and purpose.

Autonomy is the desire to be self directed. Traditional forms of management are great for compliance, but if you want engagement, self direction is better.

Mastery is the urge to get better at stuff. Why do people play the guitar on the weekend? To get better at it, because its fun and satisfying.

Purpose makes coming to work feel better. More and more organisations want to have a transcendent purpose, because that's the way to get better talent.

Dan Pink introduces ‘The Candle Problem’ – attaching a candle to a wall with a box of thumbtacks and matches to that it doesn’t drip. 2 groups try to solve the problem – one is told they are timing to discover norms, while the other is given money if they are in the top 25%. This test consistently shows that the group being given money is 3minutes slower than the other. Other research over 40 years backs up the idea that for most tasks you can’t incentivize people to perform better with money. This is one of the most robust findings from social science, but also the most ignored. There is a mismatch between what science knows and what business does.

Extrinsic motivators do however work well for ’20th century tasks’ – with manual work and simple solutions. The reward narrows their focus towards the answer, and pushes them to solve it quicker. But most modern professionals don’t do this kind of work, they do much more complicated tasks with no easy answer. An MIT study found a similar result – for simple mechanistic tasks a reward improved their performance, but if they required ANY kind of cognitive function the higher reward decreased performance.

Required: Based on the information you have read above, what are your thoughts on higher rewards producing lower performance? Write 350 words.

Please don't copy from anywhere. Write in your words and write appropriate answers. Thank You!

Answer 1

Question: What are your thoughts on higher rewards producing lower performance?

Answer: I think it is advisable to offer rewards that is just enough for that particular task that include thinking or creativity skills, etc.

• Rewarding higher will lead to poor performance because People will push themselves beyond their capability which might hamper their performance,
• In case of offering higher rewards for conceptual and creative thinking people's mind are focusing more on reward than on their thinking as it is human behavior that tends towards rewards,
• In case of offering higher rewards for mechanical skill things are based on certain rules or formula's which makes it easier for people to concentrate on work than focusing more on rewards,
• In case of offering rewards for completion of task within a period of time people can manage time by distribute their time to certain work and complete their task within a stipulated period which makes it easier for people to work in time bounded situations,
• In case of only offering higher reward but without setting a period of time will lead to delay in performance by individual as they are motivated to work but doesn't have right plan to work with.
• Pressure of performance is comparatively more when you offer higher rewards which may disturb the working of some people leading to poor performance, etc