1: Management author Daniel Pink observes: “When it comes to motivation, the only reason to put money on the table is to take the issue of money off the table.”
What exactly does that mean?
Monetary and material rewards are “hygiene factors,” says management psychologist Frederick Herzberg. Their “absence or unfairness can cause people to disengage, but their presence doesn’t make them feel engaged.”
Which is something most leaders do not understand.
“Managers have been taught that monetary incentives and behavioral controls are the essential, if not the only, tools for controlling behavior in organizations,” Fred Kofman writes in The Meaning Revolution.
“The assumption is like holy writ,” he notes. It has “been embedded in our culture ever since Adam Smith described the productivity of the pin factory in The Wealth of Nations.”
2: Do we humans care about material goods?
Yes, absolutely. But. . .
“Most of us do so only insofar as we have enough for ourselves and our loved ones,” Fred writes.
After that, the significance of additional money or other martial rewards drops. Significantly.
“Or as economists with a penchant for obscure language like to say, ‘The marginal utility of income decreases at an increasing rate,'” Fred explains.
Two-thirds of American workers would continue to work, even if they had ten million dollars, according to a 2013 Gallup survey.
“People want to work so much that the money barely matters,” Fred observes. “But then they go to work and feel disengaged, so they can hardly wait to leave at the end of the day.”
3: What’s driving this paradox?
Fred writes: “The sad fact is that organizations are designed, led, and operated to squeeze the most out of the workers, rather than to inspire the best in them—in spite of the overwhelming evidence that those who trade quality for quantity of effort end up with neither quantity or quality.”
Do rewards and punishments induce compliance? Yes. “If our objective is to get people to obey, bribing or threatening them may work,” he notes. “But if our objective is to garner their commitment, then rewards and punishments are useless.”
Or worse.
“People aren’t like rats in a maze or Pavlov’s dogs responding to a bell,” Fred writes, “although treating them as such will induce them to behave that way.
“Monetary incentives can’t inspire people to care, to work for a common goal, or to support intelligent decision making,” he states. “Monetary incentives are emotionally inert; they can fill pockets, but they can’t touch hearts.”
Finally, monetary rewards are easy for other organizations to match, “so they don’t give any organization a competitive edge for recruiting, and engaging top talent.”
More tomorrow.
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Reflection: How does my experience align with Frederick Herzberg’s insight about material rewards being “hygiene” factors? Their “absence or unfairness can cause people to disengage, but their presence doesn’t make them feel engaged.”
Action: Discuss with a colleague, friend, or family member.
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