Question

true or fasle

Per Dan Ariely, all people care about is money, and the moment we give them money, we can direct them to work one way or another. This is why we give bonuses to bankers and pay in all kinds of ways.

Answer 1

People have three psychological needs – to feel autonomous, to feel competent and to feel related to others,” he says. Payment, according to Deci’s research, does not fulfill these needs. Over-emphasis on financial reward undermines autonomy and therefore intrinsic motivation, he says. “This [negative effect of money on motivation] matters hugely. You need high quality performance from bankers. You need thinkers, problem solvers, people who can be creative and using money to motivate them will not get you that.”

Perhaps more surprisingly some economists also question how good money is as a motivator. Dan Ariely, of Duke University, North Carolina, in the US, provides a compelling example. “If I ask you to help me change a tire on my car you might be willing to help, but if I offer you a dollar for this you don’t say to yourself ‘gee I get to help Dan and I get a dollar’. In contrast you say: ‘It’s a dollar, I don’t work for a dollar’ and you’re less interested in doing this.” In other words the introduction of financial incentives into a relationship by one party can undermine another's motivation to perform a task.

But maybe the small sums involved in Ariely’s example and Deci’s experiments undermine their application to real-world international business and finance. To address this, Ariely and colleagues, recruited villagers in India to play games testing memory, creativity and motor skills, offering three different groups four, 40 or 400 rupees per game for scoring highly. The maximum reward was equivalent to the amount spent by the average person living in rural India in five months. They found that those offered the highest incentives performed worst, earning an average of 20% of the maximum possible, compared to around 36% for those in the low and medium reward groups. “Our results challenge the assumption that an increase in motivation would necessarily lead to improvements in performance,” says Ariely.

The results, published in the journal Psychological Sciences in 2009, showed performance was worse when the larger bonus was on offer and that this was associated with increased activity in brain regions involved in motivation. Mobbs suggests that excessive activity in areas of the brain that deal with motivation can come to dominate our decision-making abilities, leading us to make more mistakes, or "choke on the money".

Money can and does motivate people to work, yet large performance-related bonuses can reduce our personal interest in tasks and potentially undermine performance. While some progressive employers have started to take note of some of these insights being generated by the behavioural sciences, a larger number could probably benefit from a deeper understanding of employee motivation in order to re-design working patterns and payment schemes in ways that could improve both job satisfaction and productivity.

“I am not suggesting that they [people] should not be well paid for doing their work," says Deci. "I am saying we need to get out of the place of thinking that the way to motivate is to give them incentives for specific tasks. We need to think about how to make the workplace one in which people will get their needs satisfied and in which they will perform well.”