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May 26, 2011
Money Not the Motivator We Think It Is, Says Author Daniel Pink

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Author Dan Pink stunned some comp pros in the audience at WorldatWork’s annual convention in San Diego when he questioned effectiveness of money as a motivator.

Pink, author of popular management books including his latest, Drive: The Surprising Truth About What Motivates Us, offered examples of how traditionally-held concepts of compensation and motivation may be flawed.

Gaming the System

In Pink’s first example, management at a software company was concerned that sales people were “gaming the sales compensation system.” So they did the typical thing, they made the system more complex. That just spurred the sales people to better gaming.

The CEO decided (“It was heresy, Pink says) to eliminate commissions and give salespeople a higher base and a share of year-end profits. Result:

  • Total sales were up
  • Customer Satisfaction was up
  • Greater collaboration was observed
  • Sales people made more money

The main point, says Pink, is that our basic assumptions about money and motivation are “often wrong.” We assume that if we reward behavior it will be repeated and if we punish behavior it will stop. That’s just not always true, says Pink.

The Daycare Study

Another study in India and Cambridge UK, three similar groups were asked to perform some physical and some mental tasks. Each group had a different level of reward. For the physical, mechanical, routine type tasks, the results were as expected—the higher the reward, the better the performance. But, Pink says, when “even rudimentary cognitive skill” was required, the larger reward led to worse performance. “This was ‘disturbing’ to those with a traditional view of pay and performance,” Pink notes.

Punishment

Traditional thinking says that punishment will tend to reduce or eliminate undesired behavior. But Pink points to s study of Israeli daycare centers. Most people picked their children up on time but there were a few who picked their children up late, thereby causing problems for the daycare workers who had to stay late and wait. The center decided to institute a fine for picking up a child more than 10 minutes late. The result? There was an increase in both the number of late pickups and of the number of minutes late.

What Went Wrong?

Before the fine, it was a moral question, and most people didn’t want to inconvenience the daycare workers. But as soon as the fine was imposed, it became a transaction. Some parents just said, I’m happy to pay the fine. And others took advantage, saying, If I am going to be 11 minutes late, I might as well be 25 minutes late.

The message Pink hopes to get across with his examples? Challenge those basic assumptions about pay and performance.

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