What companies get wrong about motivating their people

Sunday, January 22nd, 2017

Dan Ariely’s Payoff looks at what companies get wrong about motivating their people:

A few years ago, behavioral economist Dan Ariely conducted a study at a semiconductor factory of Intel’s in Israel. Workers were given either a $30 bonus, a pizza voucher or a complimentary text message from the boss at the end of the first workday of the week as an incentive to meet targets. (A separate control group received nothing.) Pizza, interestingly, was the best motivator on the first day, but over the course of a week the compliment had the best overall effect, even better than the cash. “When I get the money, I’m interested, when I’m not getting the money, I’m not so interested,” Ariely said in a recent interview. “Even relatively small bonuses can reframe to people how they think about work.”

“Purpose” has become a buzzword:

Often what it means is that the CEO picks a charity that they give money to. That’s often corporate social responsibility. But the reality is that a lot of meaning is about the small struggles in life and managing to overcome them and feeling a sense of progress.

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Companies often don’t create this kind of sense of connection and meaning. They destroy it — unintentionally — with rules and regulations.

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In many companies, in the name of bureaucracy and procedure and streamlining things, we’re basically eliminating people’s ability to use their own judgment. We think about people as cogs. And because of that we eliminate their motivation.

Ariely is largely against bonuses:

I don’t even think we should pay bonuses to CEOs. There’s lots of reasons to give bonuses. Some are for accounting purposes — a company says ‘Let’s not promise people a fixed amount of money: You’ll get at least x, above that we’ll do revenue sharing.’ I understand that. It depends on how much money we make. But when you have performance-contingent bonuses — and this goes back to the book — to motivate people, what you are assuming can hold people back. Imagine I paid you on a performance-contingent approach. What is my underlying assumption? My underlying assumption is that you know what you need to do but you’re too lazy to do it.

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How many CEOs are just lazy? Who’d say, if they didn’t have the bonus, that I’m not interested in working? CEOs are deeply involved in their companies. Their egos are tied to it. The second thing they tell you after they say their name, often before they tell you how many kids they have and what hobbies they have is what company they are leading. To think that they’re just working for a bonus is just completely crazy.

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