What the study showed was that, for simple, algorithmic, mechanical tasks, financial rewards work. But once the task moves above a rudimentary cognitive skill level, then financial rewards actually… backfire.
How can that be?
A study was done at MIT, where students were given various tasks ranging from memorizing digits, solving word puzzles to throwing a ball through a hoop. To incentivise the students, they gave them three levels of rewards similar to a typical motivation scheme within an organization. Thus if they reached level 1, they would get x, if they reached level 2 they get y, etc. What the study showed was that, for simple, algorithmic, mechanical tasks, financial rewards work. But once the task moves above a rudimentary cognitive skill level, then financial rewards actually… backfire.
Once you get above rudimentary cognitive skill, it's the other way around. For simple straight forward tasks, like 'if you do this then you get that', financial rewards deliver outstanding results. But when a task gets more complicated, when it requires conceptual, creative thinking, then those incentives don't work. If you don't pay people enough they won't be motivated. What this proves is that money is a motivator, yes. But the trick is to pay people enough so that money no longer matters, and people think about work, not cash.
What then emerged was a new purpose-driven motive based on three key factors: autonomy (get out of their way), mastery (people want to get better at tasks), and purpose (people want to make a contribution). Autonomy means to be self-directed. An Australian software company, Atlassian, told their developers that they can work on anything with whomever they want for 24 hours every quarter. All they have to do is show the results to the company at the end of the 24 hours. Afterwards everyone got together with refreshments and discussed what they worked on. That one day of pure undiluted autonomy has lead to software fixes, various ideas for new projects and a culture based on innovation.
Mastery is the urge to get better at stuff. This is why people play musical instruments at the weekend. Why would people spend time on something that is not going to lead to any financial rewards or finding a partner? Because it's fun and you can get better at it which is satisfying. Take for example companies like Linux, Apache and Wikipedia. Various people around the world who have satisfying, challenging jobs which pay them a good salary, spend their spare time contributing to Linux or Wikipedia. But why are they doing this? Because it's challenging, it involves mastery and they get to make a contribution to the world.
More and more organisations across the world are realising that they need to have a purpose. Partly because it makes acquiring new talent easier and it makes coming to work easier. When the profit motive becomes unmoored from the purpose motive, bad things happen. Companies who are flourishing are animated by this purpose. Take Skype as an example: 'Our goal is to be disruptive, but in the cause of making this world a better place'. We need to have purpose in order to get up in the morning and go to work. The science indicates that we care about mastery, and we want to be self-directed. Based on these findings we can build better organisations, which in turn will also lead to making our world just a little bit better.
How can that be?
A study was done at MIT, where students were given various tasks ranging from memorizing digits, solving word puzzles to throwing a ball through a hoop. To incentivise the students, they gave them three levels of rewards similar to a typical motivation scheme within an organization. Thus if they reached level 1, they would get x, if they reached level 2 they get y, etc. What the study showed was that, for simple, algorithmic, mechanical tasks, financial rewards work. But once the task moves above a rudimentary cognitive skill level, then financial rewards actually… backfire.
Once you get above rudimentary cognitive skill, it's the other way around. For simple straight forward tasks, like 'if you do this then you get that', financial rewards deliver outstanding results. But when a task gets more complicated, when it requires conceptual, creative thinking, then those incentives don't work. If you don't pay people enough they won't be motivated. What this proves is that money is a motivator, yes. But the trick is to pay people enough so that money no longer matters, and people think about work, not cash.
What then emerged was a new purpose-driven motive based on three key factors: autonomy (get out of their way), mastery (people want to get better at tasks), and purpose (people want to make a contribution). Autonomy means to be self-directed. An Australian software company, Atlassian, told their developers that they can work on anything with whomever they want for 24 hours every quarter. All they have to do is show the results to the company at the end of the 24 hours. Afterwards everyone got together with refreshments and discussed what they worked on. That one day of pure undiluted autonomy has lead to software fixes, various ideas for new projects and a culture based on innovation.
Mastery is the urge to get better at stuff. This is why people play musical instruments at the weekend. Why would people spend time on something that is not going to lead to any financial rewards or finding a partner? Because it's fun and you can get better at it which is satisfying. Take for example companies like Linux, Apache and Wikipedia. Various people around the world who have satisfying, challenging jobs which pay them a good salary, spend their spare time contributing to Linux or Wikipedia. But why are they doing this? Because it's challenging, it involves mastery and they get to make a contribution to the world.
More and more organisations across the world are realising that they need to have a purpose. Partly because it makes acquiring new talent easier and it makes coming to work easier. When the profit motive becomes unmoored from the purpose motive, bad things happen. Companies who are flourishing are animated by this purpose. Take Skype as an example: 'Our goal is to be disruptive, but in the cause of making this world a better place'. We need to have purpose in order to get up in the morning and go to work. The science indicates that we care about mastery, and we want to be self-directed. Based on these findings we can build better organisations, which in turn will also lead to making our world just a little bit better.
Traditional management styles are great when what you are after is compliance. But in this new, purpose-driven world, you need to enable staff to do what they do well – and here, self-direction works best.
