Incentivisation may harm performance

In this fascinating (RSA animated) talk, Daniel Pink reminds that management is not a natural phenomenon. It was invented in the 20th century. So, it may not be the right solution for the future.

He further points out that business does not do what science knows. For example:

• contingent ("if-then") rewards often destroy productivity, particularly in work where creativity is required
• management is great if you want compliance, but not if you want engagement
• intrinsic self-motivation often produces better results in complex and creative environments. It relies on
• autonomy
• mastery, and
• purpose

Separately, research conducted by psychologists Edward Deci and Richard Ryan in the 1970s found that when individuals are intrinsically motivated to engage in an activity, such as a hobby or a creative task, introducing external rewards, such as money, can undermine their intrinsic motivation.

This is often referred to as the "overjustification effect" or the "crowding-out effect."

Theories posited for this effect include:

• extrinsic rewards shift the focus away from intrinsic motivations
• extrinsic reward, create an external locus of control, reducing that sense of autonomy

When considering this subject, it is useful to look at pursuits into which people do pour their time, energy and money. Sports are the obvious choice that springs to mind. People engage with sports, as players or spectators, even more passionately than they engage with arts and culture. And certainly more than most people engage with their work.

I think that one of the reasons for this is that the language of winning is much more straightforward. In sports, everyone knows who the competitors are. Everyone knows exactly what they need to do to score points. The causality between actions and scoring is clear. And everyone knows who is winning and losing at any point in time.

In business, this is less obvious. Companies keep score using arcane accounting conventions. Few employees understand these. Where there is a clear focus on the competition, relative performance is often less than clear. Could we make work more engaging by making it more like sports - effectively by gamifying work?

Resources:

• The performance paradox

See also:

• Stop Incentivizing “Productivity Theater” at Work - The Decision Lab

Updated 28 February 2023.

photo credit: wuestenigel Euro banknote with measure tape on white background via photopin (license)