How can rewards actually lead to poorer performance? It seems completely counter-intuitive, and against what economists have believed for years. People are driven by the desire to make more money. Reward them, and they will perform.
Or will they? According to Dan Pink, author of Drive: The Surprising Truth About What Motivates Us, while higher pay will result in better performance for mechanical skills, as soon as a rudimentary level of cognitive skill is required, a larger reward actually leads to poorer performance – and there are multiple studies across the world, pay grades and education levels to prove it, defying the laws of behavioural physics.
So, if money doesn’t motivate us, what does? According to Pink, the three factors that lead to better performance are autonomy, mastery and purpose.
1 Autonomy. This is the desire to be self-motivated, or basically run our own lives. If you want compliance, traditional management is fine. But if you want engagement, people need to be self-motivated.
2 Mastery. This is the urge to get better at stuff, mainly because we like to get better at stuff. Here’s a case in point: Linux, Apache and Wikipedia were all created by technically sophisticated people who had well paying jobs – for free! Why? Because in their limited discretionary time they wanted to maximise their skills and design something that matters, that they could give to the world. And that leads to the third point: purpose.
3 Purpose. The organsiations that are created or led by people determined to make a contribution to the world (think Bill Gates and Steve Jobs) are the ones that are flourishing. Sure, profits are important, but purpose is what truly.