July 18, 2016


Demystifying “incentives” to drive employee motivation

This is the second part of the blog which discusses how you address employee motivation at work. My previous post addresses the issue of employee engagement and productivity

So while we addressed some innovative methods for increasing employee productivity and challenges employees face at the workplace let’s now think through problem 2 How do you drive employee motivation ? Do I need motivation for my work? I get paid a handsome salary, doesn’t that suffice?

The power of incentive is a proven business case for centuries. Incentives are designed to sharpen the thinking and accelerate creativity. However, recognized researchers from top universities tend to disagree. It has been proven that incentives generally degrade the thinking ability and block the creativity.

“If you do this then you get that” approach does work in some cases, but fails to prove results in most of the cases of often do more harm. This is one of the most robust but unfortunately most ignored findings in social science.

The science of human employee engagement and motivation works on 2 vital aspects- 1). Extrinsic and 2). Intrinsic motivators. There is a mismatch between what science knows and what business does. The business operating system e.g. how employees are motivated, how human resources are applied is built entirely around extrinsic motivators with a “carrots and sticks” approach. This approach worked exceptionally well until the end of 20th century.

Rewards work for tasks with clearly defined rules, clear designation to go because by nature Rewards narrow’s focus, concentrate the mind therefore Left brain type of tasks are conducive to work on carrot and stick approach. Most of 21st century white-collar jobs are right brain demands which involve creativity and conceptual thinking, where rules are mystifying and solutions are non-obvious.

The Massachusetts Institute of Technology found out “as long as task involved any mechanical skill, bonus worked as they would be expected: The higher the pay, the better the performance” But “once the task called for even rudimentary cognitive skill” a larger reward “led to poorer performance”. The economist at London School of Economics recently looked at 51 studies (pay for performance plans) and their finding says “We find the financial incentive can result in a negative impact on overall performance”.

It will not be erroneous to state that the talent management policies and decisions of today’s organizations are based on outdated and unexamined assumptions and not on science. Don’t just entice employees with sweeter carrot or intimidate with sharper sticks. Focus should remain on intrinsic motivators, deploying new business operating system with novel building blocks such as Autonomy, Mastery and Purpose.

Management does not emanate from nature like a tree. It has been developed over time. Conventional management can drive compliance but employ engagement is strongest with self-direction. Personally, I am a great fan of ROWE (Result Oriented Work Environment) with no predefined scheduled place of work. Meetings are indubitably optional in this model, all that matters is results!

It might read psychedelic to you. But magic happens beyond whys and wherefores. Adopt intrinsic instigators over extrinsic, abhor as many meetings and managers culture and let’s darn the mismatch between what science knows and what businesses do.