At work I’m in the process of setting developmental goals for myself for the next year, I’ve started looking into some TED talks about leadership and business effectiveness. Yes, I like this stuff. Yes, that’s a little weird.
I came across a video that really shocked me. It’s called … You can watch the video here. Actually, I highly recommend you do or else the rest of this post isn’t going to make a lot of sense.
The premise of this guy’s argument is that when considering mentally challenging tasks, money is not only a bad motivator; it actually makes people perform worse than no incentive at all.
Obviously this goes against any normal person’s thought process. And no, I don’t consider Marxists “normal people”. I agree wholeheartedly that people are worse at completing the stupid task in this experiment when there is a lot of money at stake, but completing the candle task is much different from completing tasks at your job.
Let’s look at the difference between your job and the candle wax game.
Unless this is the first day of a brand new job for you, you probably have years of experience and/or education that has prepared you to be effective at your job. You’ve almost certainly made mistakes (and hopefully learned from them) and you’ve had some great successes. When you are confronted with a particularly difficult problem, you draw on your immense wealth of experience to guide you to the correct solution.
In the candle wax game, you are placed in a room and asked to complete some brain puzzling task that has no basis in practicality and, unless you’re a member of some weird riddle society, you have no training or experience to draw upon to complete the brain teaser.
This guy presents the candle wax game as proof that financial incentives don’t make people more effective at what they are doing. Heck, prestigious universities have spent lots of money doing studies to prove this very point. The sad thing is, they could have just watched the game-show network and come to the same conclusion.
Have you ever been watching Wheel of Fortune and seen a board that says something like HAPP_ BI_TH_A_ and nobody can figure it out? You’re screaming at the TV “HAPPY BIRTHDAY YOU IDIOT!” but the guy says “I’d like to buy an O” and you just smack your head.
That guy can’t see the answer because he’s sitting on $9,200 and a trip to Costa Rica and it’s freaking him out. He has all this pressure and he fails at a task that he’s not trained for.
Furthermore, nobody in their right mind believes that you can just throw more money at someone to get their brain to work better. If that were the case then Bill Gates would have paid someone enough to come up with a cure for AIDS. Money doesn’t make people smarter. It never has and it never will. It can, however, make someone work harder.
At my old job they gave crappy bonuses. I mean really crappy. They were so bad that I literally never even considered “What might happen to my bonus?” when I was trying to decide whether or not to finish something today or wait for tomorrow. There was essentially no incentive to work harder, so most of the time I didn’t. It made me an unhappy employee because there was no difference in my pay whether I was working like a dog or sleeping like a dog.
At my current job my bonus is a huge part of my pay, and I’m working harder at this job than I ever worked at my last one.
In summary, this guy is going against common sense and saying that financial incentives are actually counter-productive in the business world because it makes people dumber. What he doesn’t realize is his study is limited to a single point in time and deals with a task that the person is not prepared or trained to accomplish.
In the world we all live in, financial incentive doesn’t make anyone smarter, but it can make them work a lot harder. And when you work harder, you get better at your job. You gain the experience and knowledge that will help you solve the next problem.
Luckily for us, financial incentive is now, and will always be, the only way for a company to get incredible results from their employees.
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.