How Monetary Rewards Can Demotivate Creative Works

from the it's-the-link dept

Back in April, I wrote a post about Daniel Pink's new book, Drive, in which he highlights the rather stunning amount of counterintuitive research that suggests that money can actually make people less motivated to do creative works. Since then, I got a copy of the book myself, but it's in the stack with about five books that I want to get to before it, so I may not get to it for a while. However, a lot of folks have been passing around this great video of a 10 minute presentation that Pink did, which was then whiteboard animated. It's really well done and fun to watch and basically summarizes the idea in the book:
The same point is made in the presentation, but it clarifies it a bit. It's not that money isn't important. That finding would make little sense at all. As people note all the time, you need to be able to make money to survive. But, it's that once people have a base level of money that makes them comfortable, using monetary incentives to get them to do creative work fails. Not just fails, but leads to worse performance. As we noted in the original blog post about this, my initial inkling was that this highlighted a point often forgotten by economists and non-economists alike: while marginal benefit is often considered in terms of dollars, that doesn't mean that cash is the the equivalent of marginal benefit. That is, you can't just replace other benefits with cash. Sometimes people value other types of rewards even greater than the equivalent in cash. And, Pink's book and presentation highlight how it's often things like meaning and working on something fulfilling that are much more beneficial to people than cash. So it's not that money is bad for creativity -- but that having a direct pay-for-performance type scheme seems to create negative consequences when it comes to cognitive work (it works fine for repetitive work, however) -- and other types of non-monetary rewards are a lot more effective.

And while it isn't discussed in the presentation (and I don't know if it's discussed in the book), I wonder if the high monetary rewards in a "if you do this task, we'll give you $x amount" manner actually has a strong cognitive cost. That is, the pressure to then do the task well in order to "earn" that money actually ends up causing a creativity cost that takes away from the output. When you're just doing creative work for non-cash rewards, the pressure doesn't feel quite as strong. When you put the dollar signs in, it adds mental costs, and those costs outweigh the cash rewards. It's even possible, then, that the higher the cash reward, the greater the mental costs.

Related to all of this, Clay Shirky has also just come out with a new book, Cognitive Surplus (which isn't yet in the pile on my desk, but probably will be soon) that builds on an idea that he's talked about for years: about how all these claims that people doing stuff online for free is a "waste" totally misses the point. For the past few decades, people have devoted billions of hours to watching television. Yet, with the internet, rather than watching TV, they're actually doing some creative work (sometimes for free). So when looked at in isolation, doing stuff for free may seem weird, when combined in the larger scheme of things as a substitute for mind-numbing TV watching, it's actually a huge advancement.

Wired had the smart idea of having Shirky and Pink sit down and chat with each other, and they rehash some of these ideas, and how the concepts put forth in the two books seem to overlap. Moving people away from merely consuming content towards creating content leads to a huge boost in creativity and creative output -- exactly what we've seen happening. And, it's not because of monetary incentives -- in fact, it's often because of the exact opposite.

The more you think about it, the more this all makes sense, and the more you realize just how screwed up so many incentive structures are today, because so many people think that purely monetary incentives work best.

Filed Under: behavior, clay shirky, daniel pink, drive, economics, money, motivation

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  1. identicon
    pr, 5 Jun 2010 @ 9:53am

    I could go on all day

    Amazing discussion. I have so many examples of why the guy is right I could write all day. For free, even. Anonymously!

    I'm a regular blood donor. Why do I waste an hour and put up with the pain for a cookie and a juice box? I'm not sure. Sometimes it's worse; sometimes I do platelet pheresis. That's two hours, I have to get up at 5:30 on a Saturday, and I feel goofy all day. Why don't I go to the plasma center and get, what is it, thirty bucks? If they gave me ten bucks at the Red Cross would they get me to do it more? I'm pretty sure the answer is no, I would do it less.

    In the late '80s I saw a segment on the news of a guy who worked in a screw factory in the Soviet Union. He was working his *** off making screws. At the end of the day he was going to get paid in a useless currency that wouldn't buy much. But still he made screws. He believed in what he was doing.

    My business is aerospace/defense. People used to get really pumped up about doing that kind of work. Now it's drudgery. The interesting backward results I see is that the more they try to control costs, the more expensive everything gets. The more they try to reduce mistakes, the more mistakes they get. The more they try to get people "engaged" (yeah, my company uses that term) the more cynical they get.

    Cost control is a pretty good example of how it works. Take a bunch of motivated, intelligent engineers and tell them the best ones, the technical leaders, that they have to be cost managers. They don't want to do it, they want to make things.

    Management tries to use the argument that "it all pays the same" whether you're designing circuits or doing Mickey Mouse bean counting. Even though they have a hard time articulating the concept, everyone knows that's not true. The smart people dig in their heels and either refuse to do it, or do it badly, or maneuver to get out of it.

    What happens next is the "incentives" route. They reward with (at least the prospect of) promotions and pay to those willing to do the bean counting. The ones who take this offer are invariably the ambitious but not so talented ones. The people who are motivated by personal gain are exactly the worst people you want in positions of leadership, but that's what you get.

    That doesn't mean that money is never a motivator. We often get into scrums over paid overtime. People get ordered to work some test over nights or on weekends, or work all weekend because somebody over-promised on a delivery date, etc. When that happens people are seriously counter-motivated by the notion of doing it for free. After seeing it plenty of times I think that's more a matter of recognition of the value of the sacrifice being made than the cash itself.

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