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Why money doesn't motivate most workers

People in more qualified and creative jobs are not motivated by cash rewards, says author Daniel Pink who is visiting Sweden next week.

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By studying monkeys scientists can draw the conclusion that most workers -- including top-managers of multinational companies -- don’t perform better if they are rewarded more money.

“It’s always dangerous to extrapolate experiments on monkeys to CEOs. But there are definitely similarities”, Daniel Pink, the American author of the bestselling "Drive: The Surprising Truth About What Motivates Us" that is to be launched in Swedish next week, told The Swedish Wire in an interview.

Most of us believe that the best way to motivate staff and executives is with external rewards like money. That’s a mistake, he thinks.

Although scientists for more than a half century have tried to make us rethink money as the main source of motivation – and research shows there are no significant connections between company performance and executive pay – company executives get paid more and more each year in salaries, bonuses and other compensation schemes.

In Sweden CEOs make 18 times more money than a blue-collar worker, according to the Swedish Trade Union Confederation LO. But that’s penny ante compared to the United States.

During the last decades compensation for US executives has swelled enormously. At its peak top-managers earned 525 times more than a regular worker, overtaking the previous record holder; the Soviet Union’s Red Army with 400 times between the highest and lowest pay level. 

Daniel Pink’s book gives a fascinating insight into human nature and offers new ways to think about motivation. Above all, he exposes the mismatch between what science knows and what business does.

In the 1940s Harry F. Harlow, professor of psychology at the University of Wisconsin, conducted an experiment with monkeys (that were to solve a puzzle), which for the first time opened scientists eyes for a new way of motivation.

At that time scientists knew that two main drives powered behavior: the biological drive (we eat because we’re hungry) and the so-called carrot-and-stick approach (if you do this I’ll reward you; if you don’t do this I’ll punish you).

But the monkeys in the experiment solved the puzzle without these two drives, making Harry F. Harlow discover a third drive: the joy of the task.

“The monkeys solved the puzzles simply because they found it gratifying to solve puzzles. They enjoyed it. The joy of the task was its own reward”, Daniel Pink writes.

Other experiments pointed in the same direction – but took it a step further. By rewarding people the pleasure of the task would die and the result would be hurt. 

One example is to be found in Mark Twain’s The Adventures of Tom Sawyer:

There are wealthy gentlemen in England who drive four-horse passenger-coaches twenty or thirty miles on a daily line, in the summer, because the privilege costs them considerable money; but if they were offered wages for the service, that would turn it into work and then they would resign.

The carrot-and-stick approach usually works well in situations where workers are performing simple, routine tasks. But not for jobs that require creativity or deeper, more complex thinking.

If you ask someone to come up with an idea and you offer to reward him or her with 1,000 dollars you’ll definitely get a response, he explains. You will have a lot of activity – but you will not have creativity. Still, high activity is more appreciated in most corporations; people filling in spreadsheets, turning papers, wring e-mails…

“We must recognize that money is a motivator, but not in the way we think. We easily forget about that third drive”, Daniel Pink said. “Making progress at work is one of the most motivating things you could do. We also must feel a sense of purpose, that what we are doing is in the service of something larger than our self”.

Why do we still use money as the key motivator?
“It’s because it’s easy. We do things as we always have done them. But they are operating from a false assumption; they’ve never scrutinized the idea”.

If you ask a CEO if he will work harder and perform better if he gets 8 million dollar instead of 4 million, he would – at least in his private moments – say “No”, Daniel Pink points out. Still, salaries keep rising.

Besides, who would have thought 15 years ago that Microsoft would have to pull the plug on the encyclopedia MSN Encarta, created by paid professional writers and editors, because of competition from Wikipedia, created by people who write and edit articles for fun?

Business magazine Forbes makes a point worth considering in a review: “Corporate boards, in fact, could do well by kicking out their pay consultants for an hour and reading Pink's conclusions instead”.

- - -
Before turning full-time to writing, Daniel Pink worked in the White House as a speechwriter for Vice-President Al Gore. He’s also the author of the best-selling "Free Agent Nation: The Future of Working for Yourself".

On Monday March 22 Daniel Pink will attend a seminar at the Royal Swedish Academy of Engineering Sciences together with economist Kjell A Nordström, circus director Tilde Björfors and Ryan Koch from the US Embassy.

Last Updated (Tuesday, 16 March 2010 16:59)

 

Comments 

 
#11 2011-01-05 05:23
I think some of you people either did not read the book, or you have been so entrenched in the Operating System 2.0 for so long, that words like creativity, innovation, and intrinsic motivation, let alone purpose in making the world better, must sound like a foreign language. Toyota learned this truth many years ago and have consistently set the trends for reliability, quality, resale value, and customer loyalty. They value their people, their people respond with creativity. No bail out needed.
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#10 2010-12-29 07:23
Where did dipsh@# come up with most? The only place I see that in his so-called "research" is in his opening statement. Not those he is quoting from. What a moron. Try to get average Joe to go for this, or those living paycheck to paycheck. Sure, they don't care what you pay them, give them a pat on the back and let them go home to their cardboard box. MORON.
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#9 2010-12-28 10:58
I lost my job working for a school district after 15 years. I was lucky enough to be hired as an administrator 1 month later in a new district. I am currently making about $6800 less than I did as a 10 month teacher and I am now on a 12 month calender and putting in more hours. I have got news for you, when you see others in the same position who are making $10,000-$20,000 more than you, it's difficult to be happy with your current situation.
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#8 2010-12-28 09:56
most people live a life that was not what one expected.. so, at this point one has to make a living. this site sucks... reality is the bottom line.. watch s. Korea that is sad... that is the reality of today.. and that is scary.. look for me.. i think money does matter.. and companies do to... i am scared about n/s Korea and one should... dd
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#7 2010-12-28 02:50
Now, a year later, I am deciding to quit this job for another one with a lower pay but where I have more responsibilitie s. Of course, another reason why I want to quit my current job is that there is too much overtime work. But that also goes to prove that the extra pay is not enough for me to be willing to sacrifice my time.
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#6 2010-12-28 02:49
It's quite strange but this article really strikes a chord with me. When I started working for my firm a year ago, I started with an ok pay with which I can adequately support myself. After three months, my boss gave me a big pay raise, and all of a sudden I lost my motivation. I still did my best at my job but did not have the motivation to do more.
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#5 2010-12-27 23:27
And not for nothing, but you're misinformed if you think Pink is getting any money out of people who do or don't manage differently as a result of "his ideas". Which aren't his, by the way: the research has been out there for 30-40 years, if you care to read it.

He makes money from selling books. Save the conspiracy theories of the mythical MBAs behind the curtain for another forum.
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#4 2010-12-27 23:25
ross: That's not what Pink is saying at all. He makes the specific point to say that employees must be adequately paid to begin with. It's what happens AFTER that that everybody tends to get wrong. Bonuses only work on monkey-could-do-it work, not anything requiring higher-order thought. It's good research, on real people in the real world. And that's what makes it such an important read. If managers keep on with the money incentives, it's THEN we'll see the companies go down the tubes.
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#3 2010-12-27 19:48
Thank you Marcia; your sentiments reflect those others who's money earnings underwrite their lives; your point is where the real world stresses meet the mythical MBA [censored] this guys is fronting; selling his notions is selfserving as it fattens his bonuses.

All I have to add is manage people in the real world and you will get a much clearer picture of how working folks think.
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#2 2010-12-27 19:41
This guy is spewing the same falsehoods that senior management points to that eventually sinks the firm; as a SVP and manager at 3 wall street firms for over 30 years, I can tell you that my firms lost many folks because they were not being paid enough; no employee ever came to me and said, Ross, "I know that I am not earning enough here to live on but I am completely happy in my job!" It never happened to anyone I knew and it never will in the business world.
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