Fact: bonuses don’t improve performance

“There’s a mismatch between what science knows and what business does.”- Dan Pink

Admittedly, the heading to this post is a tad provocative, and it is maybe not quite as black and white, but none the less financial incentives are simply not all they are cracked up to be.

Dan Pink gave an entertaining and thought-provoking talk on motivation at TED in July this year that went some way to debunking the myth that bonuses work as motivational and performance enhancing tools (thanks to Bruce @ FourGroups for bringing this to my attention). His argument can summarized thus (although I encourage you to spare 20 minutes to watch it, well worth the time). Rewards:

Narrow focus
Restrict possibilities
Work if you are after improved performance for mechanical tasks
Do not work, and in fact decrease performance, when even rudimentary cognitive skills are required for completion of tasks
Further more, in this latter case, the larger the reward the poorer the performance

This clearly challenges many of the assumptions in organisations today, even more so when coupled with the notion that the answer to improved performance comes from tapping into “intrinsic motivation” and empowering people to operate autonomously.

One example given was that of Google, who allow staff to work on projects of their own choosing 20% of the time. Net result, amongst other product innovations, were Google Mail and Google News.

I also liked Pink’s use of Encarta versus Wikipedia as an example of how traditional models of organisation and motivation do not hold up in reality. Encarta was ultimately defeated when faced with an autonomous, self-organizing, self-motivating network of agents, a classic complex adaptive system. No carrot and no stick required…. I wonder what exactly leaders in traditionally incentivized organizations are afraid of?

The above is what deboxing is all about: taking what we assume to be true and appraising it critically. By separating motivation from incentives – taking them ‘out of the same box they find themselves in’ – it frees us to inquire into what is actually going on, rather than what we assume is.