Why financial incentives inhibit quality thinking

We’ve always understood that a great motivator is to attach financial incentives to goals and targets haven’t we? The promise of bonuses and commissions will surely get the workforce going.

Although it’s true that people might try to work faster in order to achieve this result, research has shown time and time again that this type of incentive overly focusses the mind into becoming tunnel visioned on the outcome. This inhibits the brain’s ability to think properly resulting in reduced accuracy and quality in the work produced. In fact studies have shown that when assigning monetary incentives vs no incentives to 2 groups of people to figure out a puzzle – where they had to think a little outside of the box to solve it – the group that had the financial incentive to solve it consistently took more than twice as long to solve it, if at all. Financial incentives encourage people to move faster but not to think better, they actually don’t think as effectively.

In addition, by putting in a financial incentive you may permanently replace a natural desire to enjoy doing the work and to do a great job of it. Let me explain…

Although many different studies have shown this to be true, one particular study really stood out for me and made me realise something I was doing very wrong with my children.

Most children tend to enjoy colouring books, they like to see the end result of what was previously a black and white drawing and see if become vibrant with the colours they’ve used and the neatness from the care and attention they put in.

One particular study divided a group of children who enjoyed this activity in to 3 groups.

With the 1st group, they announced an attractive incentive for colouring in drawings and told them what they could expect for every drawing they completed.

With the 2nd group, they gave each child a surprise reward for doing their drawings afterwards.

With the 3rd group, they didn’t give them any incentive nor reward for doing their drawings.

What they discovered was that the first group, although produced more drawings, the care and attention was reduced.  The quality had been sacrificed for speed.

Worse still, as the researchers monitored these children in the weeks that followed they discovered that the first group no longer enjoyed the colouring as they had before, they would only do it if there was something in it for them.  The intrinsic motivation for doing it because they enjoyed it had gone.  The care and attention they previously put in order to do a good job had gone. The drawing had simply become a means to an end.

When I read this research it occurred to me that I’d been doing something similar with my children.  In the interests of getting them thinking a little more commercial I’d been encouraging them to look for ways to earn money.  Things like washing the pots, vacuuming etc.  But then I realised that the should be activities that are encouraged for the purpose of taking a pride in keeping tidy and doing their fair share around the house. 

This isn’t limited to children of course.  Don’t assume that a financial incentive is the answer since this might have the opposite effect on your employees.  Take time to listen to them and understand what is really important to them and discover ways to improve the environment they’re in so that they do the best they can intrinsically. 

Reward them by all means both with a ‘well done’ and pat on the back and with irregularexpressions of thanks and recognition be it a bonus or perhaps a meal for 2 gift voucher.