Forty years ago, a seminal study showed that pay-for-performance only produces improvements in rote assembly-line-type work. For any work that involves creativity, pay-for-performance actually decreases productivity; apparently it demeans people to think that their creative work is only evaluated in terms of money (in the programming profession it's relatively well-understood that, as long as they can get by OK, programmers don't care that much about the money -- it's the quality of experience that matters). The negative impact of pay-for-performance has been emphasized in all the important business books of the past decades, the books that all the business leaders profess to read and agree with. And yet the only reward these same business leaders can think of is money, so they do exactly what has been shown again and again to produce negative results.I must say I'm sympathetic to those business people who find this extremely counter-intuitive. While lots of people profess to not be motivated by money, the history of capitalism's success stands as one gigantic counter-argument. And are we to think the entire sales industry, which is based on pay-for-performance, is either horribly under-productive or blithely uncreative?
The blog post references a TED talk which is definitely worth watching. There, Dan Pink elaborates on the research a bit, and conclude that, "'if/then' rewards work really well for those sorts of tasks: where there's a simple set of rules, and a clear destination to go to. Rewards by their very nature narrow our focus, concentrate the mind -- that's why they work in so many cases." But for creative tasks they don't work because, "reward narrows our focus and restricts our possibility."
He goes on to cite further studies that show, "once the task called for 'even rudimentary cognitive skill', a larger reward 'led to poorer performance'."
He concludes by arguing that for creative work, there are three keys to productivity: autonomy, mastery, purpose. "Autonomy" and "purpose" fit nicely with the workflow of today's "enlightened" companies: the business owners define a vision and an objective, and trust the employees to work out a way to get there. It's a bit of a leap of faith for business owners, but it sounds like one worth taking.
Luckily there's enough different types of tasks involved in any project that you can mix and match reward types. For example, sometimes you have some pure maintainance tasks, stuff that isn't particularly fun to do but needs to be done. Adding incentives to those tasks (monetary or other) can help. For the more creative work finding other ways to reward, such as permitting parts of the project to be open sourced, for example, can work better than simply giving money.
ReplyDeleteIn terms of the comments regarding capitalism, sales jobs, etc, my feeling is that certain jobs need be be around for people whose greatest assets are personality and network. Jobs like sales, aspects of banking, etc. cater to people like that, while engineering, science, tend to cater to people that like to solve problems. It certainly possible tht different personality types would respond to rewards differently. My experience is tht people who go into sales enjoy the feeling of the 'big win' whereas engineer types are more conservative and tend to enjoy security and working from a base.