Financial Versus Non-Financial Motivation

May 15, 2014

Read an article in the morning that opened with: "It seems like common sense: a larger reward encourages a greater effort. So if you need to inspire a person or team to strive harder, an obvious tactic is to offer more money. Reality, however, is not that simple."  Indeed.  

We live in a world where lot of research is showing that money talks.  Subsequently, corporations are offering $1,700 a year to get employees to work out and drop a few pounds, governments are doling out cash rewards if you quit smoking (especially pregnant women), and vouchers to help pregnant women get out of their addiction.  Last Valentine's Day, there was the story of a couple who paid each other to do all the chores around the house. :)  We are paying kids to go to school. In Houston, a private foundation granted $1.5 million to reward fifth-graders (and their parents!) when they master basic math standards. In Dallas, more than 10,000 students earned up to $400 for taking and passing AP tests. And yes, some schools even try to motivate students with limo rides:

But there's another side of the story too.

A famous study ("A Fine is a Price") went like this: if parents are late to pick up their kids from daycare, they get fined. Turned out that the number of tardy parents increased! Money undermined social trust and good morals.

Lots of research by Edward Deci shows that, "A person's intrinsic motivation to perform an activity decreased when he received contingent monetary payments, threats of punishment for poor performance, or negative feedback about his performance."  For instance, in one study, participants were paid to play a game; later, when they weren't paid, they got tired of the game. On the other hand, participants who were just volunteers from the get go, continued to enjoy playing the game.

Researchers Sanford DeVoe and Julian House (in a paper that had a fun title: "How Does Putting a Price on Time Affect Our Ability to Smell the Roses") showed that thinking about how much you earn on an hourly basis makes you less able to enjoy downtime, just as getting paid to listen to a song made that less enjoyable.

Does reinforcement destroy intrinsic motivation?  Research is mixed, so we can cherry pick and make our own case. :)  However, what very few people talk about is the role of inner transformation, and I suspect that with the recent uptick in neuroscience, we'll see more of that exploration in the coming years.

From our experience of ServiceSpace, we've noticed that intrinsic motivation creates its own feedback loop.  If I serve others, it creates an inner transformation within me that opens me up to a great connection with others.  That intrinsic reward encourages me to serve even more, which then becomes its own virtuous cycle.  Such a feedback loop is powered by itself (or nature, if you think of it that way) and only requires an intervention when the inner transformation is weak.  That's how we're able to sustain so much work without any monetary incentives.  In place of backing from banks or venture capitalists or foundations or individuals, volunteer-run ecosystems are backed by nature. :)

In such a design, the greater the extrinsic reward, the lesser sensitivity to intrinsic activity -- and lesser the chance for inner transformation and regenerative motivation.

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"Service doesn't start when you have something to give; it blossoms naturally when you have nothing left to take."

"Real privilege lies in knowing that you have enough."