Money vs Motivation

Goals Infinite: Money vs MotivationMoney is not the number one of all the motivators, as I previously mentioned in my Top 3 misconceptions about motivation article. Numerous studies have supported this statement, but what is the deal with money as a reward? Does it increase performance in every case? Will employees do a better job when a higher reward is promised? The goal of this article is to answer these questions with facts, based on studies and make the reader understand the case of Money vs Motivation.

Money vs Motivation

Have you ever heard of the candle problem? It is a famous experiment created by Karl Duncker to measure people’s skill of creative problem-solving. The task is simple, use the given objects to attach the candle to the wall, so the wax won’t drip onto the table. The less time it takes to figure it out, the better the person is at creative problem solving. To get the solution right you’ll have to think outside of the box.

Sam Glucksberg for Princeton University used this method to measure the performance of two groups. One was a control group, and the other was promised monetary rewards based on their performance. Comparing the average time of each group, the result was that the second group had a longer average time of 2 MINUTES! This was no mere coincidence, this study has been replicated for 40 years with the same results.Conclusion:

Conclusion: Monetary rewards doesn’t automatically lead to better performance.

Dan Ariely of Duke University ran similar experiments. He made his students play different games and offered them monetary rewards based on their performance. Different games required a different amount of creative thinking. The results were incredible. Bigger rewards lead to better performance with tasks that required no creative thinking. This was expected. On the other hand, tasks that required even the smallest amount of creative thinking worked the complete opposite, bigger rewards lead to worse performance.

Conclusion: Doing tasks that require no creative problem solving, bigger rewards lead to better performance. Doing tasks that require creative problem-solving, bigger rewards lead to worse performance.

If not money, then what?

Now we know that money as a reward does not lead to better performance, it is natural to ask the question what leads to better performance doing creative tasks? Dan Pink in his book Drive lists three things that 21st-century companies use to better their employee’s performance on creative tasks. These are autonomy, mastery and purpose.

  • Autonomy is the desire to be in charge of our own lives.
  • Mastery is the desire to learn and the better our skills.
  • Purpose is the desire to be the part of something that is bigger than us.

These three driving forces are the foundations of a Result Only Work Environment (ROWE). This strategy gives freedom to their employees over their tasks, managers are responsible for defining of goals and meetings are optional. Large companies as BestBuy or Gap already adopted this strategy.

This article follows the thought process of Dan Pink’s TED talk from 2009. You can watch the video here.

I really hope this article help you understand the case of money vs motivation better. Now you know that monetary rewards don’t automatically lead to better performance, and bigger rewards lead to worse performance for creative tasks. Please share your though with me on the topic. You can do this by leaving a comment or writing me an email. If you think this article is valuable, helpful or informative, I’d like to ask you to share it with someone, as this will help us grow.


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About the author

Gabor Hosszu is the founder and head article writer of Goals Infinite. Being passionate about personal development and helping others were the main reasons he launched this site. By trade Gabor is a mechanical engineer. His hobbies include being a chilli farmer, a video game nerd and a wannabe beer expert.


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