Are financial rewards killing your company? .

15 Jun


In 1949 when Harry Harlow tested his pin hook puzzles on caged monkeys he never expected the result that transpired. Quite quickly the monkeys began finding out how to solve the puzzles and within the space of two weeks became quite adept at it. Here’s the rub, Harlow had not offered the monkeys any incentive or reward for executing the puzzle. Nothing at all , no food or water or the chance to play in a larger cage with other primates. Something else drove the monkeys to complete the puzzle and it couldn’t have been an external factor. Something had stirred inside and led the Monkeys to want to complete the task for no other reason than it felt satisfying. Really!

Twenty years later, in 1969 Edward Deci of Carnegie Mellon took this experiment up a level. Well to the human level. Deci split a number of people into two groups. Lets say Group 1 and Group 2. Deci introduced  the group to Soma puzzles. They are Tetris/Rubiks cube like puzzles. Deci asked them to complete three puzzles. After puzzle two was completed Deci said he was introducing a fourth puzzle, between puzzle two and the start of puzzle three Deci said he had to leave the room and input the data from the results of  first two puzzles into a mainframe computer and would be back shortly. In the room with the participants was a number of magazines the group could read in the downtime if they wished.

Deci left the room and had no intention of inputting results into a computer. He spent the next eight minutes exactly observing the group through a two-way mirror. He discovers that both groups spent on average 3.5 minutes of the eight minutes working with the puzzle pieces trying to work them out.

On day two he mixed it up a little. He told Group 1 that he was providing a reward of $1 (about €7 in today’s money) for each puzzle correctly solved. Group 2 unaware of this,were to complete the puzzles once again with no reward. Again after puzzle two was completed Deci left the room once again for exactly eight minutes on the pretence of  inputting data into the mainframe.  The results were a little predictable but exciting too. Group 1 who had been rewarded monetarily for completing the puzzles had spent more time during that eight minute gap working out how the puzzles aligned. Group 2 were similar as the day before spending roughly 3.5 minutes on average working on the task in the downtime.Here we had the evidence, pay people an extrinsic reward and they will become more interested in the task and ultimately perform better. Money as a motivator works.

On Day three Deci told Group 1( the group that had received the financial reward the day before) that the money had dried up and that there was no financial reward for solving the puzzles today. Group 2 once again were to complete the task as given with no mention of a reward.

Group 1 with their dollars from Yesterday tucked away in their wallets started the task as usual but something changed. In their eight minutes downtime Group 1 spent significantly less time working on the puzzles than the day before. Finding more interest in the magazines provided than the puzzles in front of them. The motivation hadn’t lasted. Take away the financial reward and why would you do something for free.

But it doesn’t end there… Group 2, who had never received a financial incentive over the three days had suddenly by the third day spent longer during the eight minutes downtime than any other day working on the puzzle. Group 2 had now become the group with greater motivation and group 1 had become unmotivated. Lack of financial rewards had demotivated Group 1. But what had motivated Group 2? Was there a link to the Harlow experiments in 1949. Had something internally driven the monkeys to complete the pin and lock tasks and likewise had something internal motivated Group 2 on day three to spend more time working out how to solve a task.

Hang on though! We had witnessed the financial incentive working so maybe we just need to toy around with that. Maybe we need to offer financial rewards consistently and motivation will increase.

tennis balls

Dan Ariely decide to look at this India in 2008. He took 87 participants and spit them into three groups. They then had to perform a series of tasks ,like placing metal puzzle pieces into a plastic frame,throwing tennis balls at a target, a numerical memory game and other cognitive tasks. The participants in their three groups were all provide with various financial rewards for completing the tasks. Group 1 receiving 1 days pay. Group 2 received the equivalent of two weeks pay( nice money in any man’s language). Group 3 received a whopping five months pay on completion of the tasks. The results were astounding. Group 1 and 2’s results were similar but Group 3 who were offered an incredible five months pay as a reward for completing the task performed the worst!! What!!

What had happened here. Would the prospect of receiving a large monetary reward not spur you on to perform better. Apparently not. A few year later Ariely took a similar experiment to M.I.T in Boston and used some  grad students. This experiment involved two tasks. One was a cognitive skill ( adding numbers)that required the use of the brain the other was a simple mechanical tapping skill( an algorithmic task) that required tapping a button as fast as possible.  The students were offered rewards of $60-$600 depending on performance of the tasks.

All students performed well and were rewarded well for the tapping task  the higher the pay the better the performance but once again when money was on the table with the cognitive task just like in India and in Decis 1969 Soma puzzle test it led to a poorer performance.

Money as a motivator does not work as we expected. As in Decis Soma puzzle experiment and in Arielys series of experiment it indicates that finacial rewards lead to lower motivation and poorer performance. It can provide greater incentives in short bursts for jobs that require little cognitive skills like a factory production line or a garment factory worker.

With the rise of automation and outsourcing the jobs that our grandparents would have been employed in are no longer as evident in our societies. Look around your workplace and work out how many jobs involve the need for cognitive attachment rather than the linear robotic jobs of yesteryear and you will realise that the way we work is changing and as we can see from above the way we need to be incentivized is too.

We have spent the last 70 years trying to work out why those monkeys wanted to solve Harlow’s pin lock puzzle and we know its not from an external promise or “If-Then” reward. If it’s not external then the only driver we have left is internal. We have now entered the age of the internal or intrinsic reward and it changes completely, how we view work and what motivates us while we are there..


One Response to “Are financial rewards killing your company? .”


  1. Are financial rewards killing your company? . | Thelollipopeffect - June 15, 2016

    […] Source: Are financial rewards killing your company? . […]


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