Employee Motivation: Can rewards hinder results?

Many companies offer employee incentives, thinking that these rewards can motivate employees to achieve greater results.  But in his upcoming book “Drive: The Surprising Truth About What Motivates Us“, author Dan Pink presents a contrasting view.

Based upon research conducted by the US Federal Reserve Board and similar “pay for performance” workplace motivation studies by the London School of Economics; they have found that “financial incentives can result in a negative impact on overall performance“.  He claims that there is a “mis-match between what science knows and what business does”, and this is one of the problems that have contributed to our current economic challenges.

Specifically he cites studies that show that incentives only work for tasks that have a “simple set of rules and a clear destination…narrowly focused on a simple solution”.  But when you’re talking about what Dan calls “21st century tasks”, where the solutions aren’t clear, not obvious, out of the box; and are sometimes found on the very edge of where one would normally look, where it takes right brain, creative, conceptual abilities – “rewards actually narrow our focus and restrict possibilities”.

Instead, Dan claims that there are three keys to employee motivation for “21st century tasks”:  Autonomy, Mastery and Purpose.  Autonomy being the “desire to direct our own lives.”  Mastery being the “desire to get better and better at something that matters”.  And Purpose being the “yearning to do what we do in the service of something larger than ourselves”.

For instance, Google has what they call 20% time.  Their engineers spend 20% of their time working on anything they want to do with autonomy over time, tasks and team.  This employee motivation strategy has resulted in products like gmail, orkut and google news, about 1/2 of their new products are born during this 20% time.

Dan continues by saying that if we eliminate those “if-then” rewards, and encourage staff motivation by allowing them to do things because they really matter, we can strengthen our businesses, solve the more difficult problems and maybe even change the world.

Listen to Dan’s inspiring video yourself here and let me know what you think.  Thanks to John Jantsch for the heads up.

Susan Martin, Business Leadership coaching