A penny for your thoughts… Is financial reward ever the best incentive?

March 8, 2016 5:13 pm
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Snooker fans will recall the controversy surrounding the Welsh Open in Cardiff last month which led to the behaviour of Ronnie O’Sullivan, one of the world’s most successful players, branded ‘unacceptable and disrespectful’.

On course for a 147, the maximum score in a game of snooker and a reasonably rare achievement even for O’Sullivan, the player only had to pot the black. O’Sullivan paused, turned to the referee, and asked what the prize money was for a 147. Informed that the prize was £10,000, he turned away from the black and potted the pink instead, ending his chances of a 147. So what encouraged this strange behaviour? O’Sullivan was later quoted as saying “I could have done it, but I didn’t think the prize was worthy of a 147”. O’Sullivan has achieved thirteen 147s in his 25-year career and been paid as much as £147,000; an expectation had been set.

What happened at the Welsh Open demonstrates the symbolic power of money; when too much is on offer, people can feel uncomfortable and undeserved, and when too little is on offer, people can feel undervalued and even insulted. If there had never been a prize, is it likely that O’Sullivan would have gone for the 147? Despite a common belief that money is a good incentive, evidence increasingly suggests that money can actually reduce people’s intrinsic motivations. An example of this is a nursery in Israel which introduced heavy charges on parents who collected their children late at the end of the day. The aim of the nursery was to discourage parents from being late, but what actually happened was that more parents were late more often, as they believed they were paying for a service. By removing a personal sense of obligation to be punctual, the tardiness simply becomes transactional, a commodity to which no guilt or shame is attached. Would the nursery have been more successful had they put the emphasis on positive behaviour such as personal morality, instead of using an extrinsic motivator?

Extrinsic motivation refers to behaviour driven by external rewards, usually financial, while intrinsic motivation is behaviour driven from internal rewards. People who are intrinsically motivated have a desire to keep doing something even when there is no tangible reward besides personal satisfaction. In earlier eras when work generally involved more repetitive, well-defined tasks, employers offered extrinsic rewards as the only motivational tool available. However, in today’s workplace where workers are increasingly asked to self-manage and problem solve, extrinsic incentives are less effective and often deleterious, not least because of their potential and unintended consequences; unsustainability (as soon as the reward is withdrawn the motivation disappears); expectation (over time the employee regards the reward as less of a bonus and as the status quo); and the over-justification effect (the undermining of one’s intrinsic motivation by extrinsic reward). An example of the latter is someone being paid to do something they had previously enjoyed as a hobby or passion. The introduction of a financial incentive results in more attention being paid to the external reward for the activity, rather than the inherent enjoyment and satisfaction of the activity itself.

It is no surprise that extrinsic rewards, like money, remain a significant motivation for workers; clearly it is necessary to earn a living in order to afford food, shelter, and clothing. But while a lack of money contributes to unhappiness, a surplus does not have the opposite effect. Once basic needs are taken care of, the introduction of more money can be less meaningful as day-to-day motivation is more strongly driven by intrinsic rewards. So why is the dichotomy between intrinsic and extrinsic motivation important? The answer is simple: if you can get someone to believe in an idea or align their values with what you want, then you have accessed an incredibly powerful form of motivation.  But how can intrinsic motivation be developed? Daniel Pink in his book ‘Drive’ lists 3 key factors:

  • Autonomy – the ability to make decisions and govern oneself
  • Mastery – the urge to progress and get better at something
  • Purpose – the ability to connect to a cause larger than oneself

To this list I would also add the following 3 factors which researchers Edward L. Deci and Richard M. Ryan describe as part of their ‘Self-Determination Theory’:

  • Relatedness – the desire to interact and connect with others
  • Recognition – receiving meaningful, positive recognition for work carried out
  • Happiness at work – people who are happy tend to be more productive

To a certain extent, people are motivated by different things, but interestingly, the most important determinant of disengagement in any workplace is incompetent leadership. Thus, it is the role of the manager that will have a significant impact on whether employees are engaged at work, or not. So how can management support meaningful work and promote the factors mentioned above, in order to develop intrinsic motivation in the workplace? Management should set clear goals, provide sufficient resources and time, offer assistance, learn from problems and successes, remove obstacles, and finally, do not micromanage. Give people work that is meaningful, allow them to make decisions, develop their skills, and provide recognition – and not only do you have a productive workforce, but a happy one!

There will undoubtedly always be people who are motivated by cold hard cash, and willing to make sacrifices in both their work and personal lives in order to reach financial goals. But is it really worth doing a job which provides little satisfaction, no free time, a lot of stress, and in which there is no perceived value added to the greater good, whatever that might be? It is highly likely that the people you know who are happiest in their jobs aren’t necessarily those on the highest salaries or being motivated by other such extrinsic incentives. People who are incentivised from within are those who make the happiest and most productive workers. Money may be what makes the world go round, but its purpose that gets us out of bed in the morning.


Written by Lyndsey Rose, Coriolis Ltd