There’s a mismatch between what science knows and what business does.
- Dan Pink
In his recent presentation at TED, author and business consultant Dan Pink talked about two things I advocate heavily on Renegade HR – data based management and intrinsic motivation (and inspiration).
In the talk, Dan blows apart the notion of pay for performance as a way to increase employee performance. In fact, he says, pay for performance actually hurts performance for most tasks.
Dan cites various studies that show that for tasks in which there’s a clearly defined process, starting point and end point, pay for performance works. But for tasks requiring creativity and unknown solutions (basically anyone who does knowledge work), performance actually decreases with traditional carrot and stick management.
So if extrinsic, instrumental motivators don’t work, what does?
- Autonomy. Giving people control over how, when and where they work.
- Mastery. Helping people becoming increasingly better at work that matters.
- Purpose. Connecting the dots between what people do and some purpose more important than themselves.
(Sounds a lot like the Renegade HR approach to human resources!)
EDIT: Based on many of the comments below, it seems some of you think I’m saying pay is irrelevant. I’m not. I think almost everyone goes to work because they get paid. My point is that monetary incentive programs are not always the most effective way to motivate great work. I offer up this quote from Dan’s presentation: “Pay people adequately and fairly, get the issue of money off the table, then give them lots of autonomy.”
So what are your thoughts? Leave a comment below.
Learn more:
- Buy Dan’s new book, Drive, on which his talk is based
- Know HR – Everything you know about pay for performance could be wrong
- iOrgPsych – Motivation for the 21st Century
- Presentation Zen – Rethinking the ideology of the carrot and the stick
- Compensation Cafe – Pay for Performance Obsolete?
(Full disclosure: The link to Dan’s book is an Amazon affiliate link. I get a small percentage of every book I sell.)
Okay… I’m getting tired of posting this but I’m gonna do it again.
Dan pink doesn’t say pay for performance doesn’t work. What he says is that studies in creative problem solving are not helped when incentives are applied. To extend that thinking to ALL activities within an enterprise is misleading and misstating what he presented.
Not only that – there are many, many studies that show that incentives do increase performance for focus and individual work. Where is that research in his talk? Dan Pink took a couple of studies – applied a business context to a non-business experiment and now is getting rock-star recognition for finding the lost secret of the temple of motivation.
This is getting so much play on the interwebs I’m half expecting everyone to stop taking a paycheck and work for autonomy – oh, wait – that would be every consultant out there – except for the part of not getting paid.
@Paul – You’re right. Dan doesn’t say “pay for performance doesn’t work.” What he actually says is that extrinsic, carrot and stick type performance management practices are not effective ways to motivate people if the desired outcome is abstract or non-process driven. Not that pay won’t motivate people, but that it would get results that are better (or, it seems, even as good) as using other motivators. In other words, pay for performance.
The studies you mentioned about pay for performance and individual work – I would really love to see that data. Can you point me towards it?
What I’m curious about, does pay for performance motivate people to complete work with higher quality or just more quickly?
Dan certainly isn’t proposing anything that’s tremendously new. In my grad school class on compensation I read an essay from the 1970′s about how pay for performance creates sub-par work. And Zappos has been applying a management style like the one Dan advocates for over a decade.
I’ll get the links and stuff for you.
As far the question of quality vs. quantity – depends on how it’s structured. Reward quantity – you get quantity. Alfie Kohn also made similar claims in his research (using school kids – and then extending to business).
Thanks Paul, looking forward to it! My particular gripe with the video is actually Dan’s mention of ROWE at the end, and how it’s increased retention and productivity. I can’t argue with the retention, but the productivity thing continues to rub me the wrong way.
I’ve mentioned on here before that the only productivity measures that have been reported at Best Buy’s ROWE are perceived productivity changes. In other words, “So now that you can do whatever you want, whenever you want, as long as your work gets done… are you doing more or less work?”
Who in their right mind is going to say, “I’m less productive”!?!
Thoughts in no particular order:
I’m with Paul on this one.
Pay works for real people with real jobs. Do you think people would pick up road kill and clean houses for free? Do you think we’d have sewer workers and garbage men if we just offered praise and emotional incentives?
If I want emotional gratification and a sense of doing good work, I’ll go volunteer at a homeless shelter.
Pay-for-performance could produce subpar work if the company and its values are subpar. All in all, I’m wary of leaders who want to pay employees with emotional gratification while their salaries and incentives are increasing, each year, well beyond the cost of living.
@Laurie – All of the jobs you described fit in the context of rigid, process driven tasks that Dan mentions in his talk. He specifically says that jobs of that nature are well motivated by pay-for-performance.
And I don’t think anywhere in the talk is there any implication that people only want to work for emotional gratification. We work because we get paid.
But you continue this notion that work is ONLY an exchange of labor for money, and in doing so, you’re cheating your readers out of an incredible opportunity to motivate their workforces beyond the simple chase of the paycheck.
Good point on the perceived productivity.
Here is my impression on the issue. Pay for performance works for the basics. You pay me; I do job. After a certain level of compensation, higher pay loses its magic. THAT’s where all this motivation stuff comes in.
@Eva – In 5 sentences, you managed to more clearly summarize my perspective than I was able to in a whole article. Thanks!
I think all jobs are some form of picking up trash. ALL OF THEM.
And picking up trash isn’t rigid or limited. My garbage men have to make decisions, interact with people, and represent a corporate and employment brand. They are brand ambassadors and they know it.
So is the dude who picks up the dead deer in my neighborhood.
So is the woman who cleans my house.
Complex work happens in all sorts of amazing ways. Decisions are made. Challenges are overcome. People learn and grow. I still think compensation, and the payment for performance, is an integral part of this process.
I still think compensation, and the payment for performance, is an integral part of this process.
I think Eva really, truly summed up my sentiments on this debate far better than I did. I will differ to her explanation.
Chris,
I think I commented on something similar to this a while back and said that I think that some people/postions/companies are just not going to be movitated in this way. If a company want’s to build a culture built on pay for performance, they better know what they are doing and stick to it. The second they go away from it, they are going to have a mess on their hands. On the flip side, if a company’s culture is not built on this, they are going to have a hard time getting buy in from the top.
Compensation is only a part of the entire “work experience” as it is only going to get you so far. The best paying gig is rarely the right gig.
Money is never going to win over passion (again, my opinion). Money will win for those who really don’t care what they are doing.
@Michael – I don’t remember the article, but I do remember the comment. Your absolutely right. The approach Dan’s advocating requires a cultural shift in the way an organization manages people, and that typically requires buy-in all the way at the top. And not just buy-in, but true behavioral modeling.
It looks like a lot of people are taking this as some communist scheme, where even if you suck at your work you get paid the same. That’s not what I think Dan’s saying.
I interpret it as, pay people fairly, but to really drive behavior and motivate great work, you need to inspire people from within.
I’ve heard Dan Pink speak several times. He is a creative and an exciting speaker. I agree with him on a number of issues but I’m not sure if I agree completely with what he is saying here. The pay for performance compensation may work well in certain situations and not in others. To draw a conclusion that paying a large reward can demotivate is not completely convincing to me. I do agree that once the basic needs are met (a fair compensation package), what motivates individuals the most is the opportunity to contribute to a cause greater than themselves. On this, I agree with Dan Pink. I would have to learn more about the studies he mentioned and whether the link he is making makes sense.
Chris – sorry to be back late to the party but I did post my response last week – and it’s more than just the “communist” plot angle. It’s the issue that we think ONE solution is what we need when we deal with people. We need multiple ways to drive motivation in the work force. To say Dan is the right way is as bad as saying only use incentives.
My response is here: http://tinyurl.com/ldchl3
@Paul – Great response! I whole-heartedly encourage any of my readers to go check it out.
I think incentives can be a powerful tool. But I do believe that finding a way to motivate people around a meaningful goal can unleash a certain potential that incentive-based management alone cannot.
Thanks again for your insights!