If you are a student of leadership, you really need to know the name Daniel H. Pink. He is a career analyst and author of a trifecta of best sellers including the latest . If you want to know how unconventional Pink is, you have to check out this career guide. It is written and illustrated in Manga style (Japanese comic) and is the only graphic novel ever to become a BusinessWeek bestseller.
While his writing is interesting, his is the real topic of today’s post. In his video, Pink talks about an old study called “The Candle Problem” and it’s re-emergence in the work of Sam Glucksberg of Princeton University. In the new studies, Glucksberg provides various motivations for solving the puzzle of the candle. In some conditions he incentivizes participants with money, in other cases with nothing. What he finds is amazing. While I don’t want to go into the detail of the problem in this entry (you can find it if you watch the video), the important finding is this. When participants are offered a monetary incentive for solving the problem, their response time is actually much SLOWER than those who are not offered money. That’s right. An incentive to solve the problem faster actually slows the process down.
This research was funded by the Federal Reserve Bank of all things, and they played with versions of the incentive and versions of the puzzle. They continued to find the same thing. Monetary reward slowed the process except in one condition. If the puzzle was presented in a way where the solution was obvious, participants actually completed the puzzle more quickly when offered money. If there was no thinking to be done, but only action, money served as a strong motivator.
Pink reveals some additional studies done at MIT and found that, in a series of games where participants are offered small, medium and large rewards for winning. The same thing happened. If the game requires only mechanical task work, the rewards influenced the completion times positively. But if there was any cognitive component of the game that required higher level thinking, rewards actually slowed the process down. By the way, this research was replicated across many cultures, ages and situations. It appears to be consistent no matter where you sit on the globe.
Here’s the point. Extrinsic rewards (bonuses, prizes, etc) are distractors when leaders are trying to achieve greater results. They simply don’t work. We have often said that money isn’t everything, but it might be that money is actually a negative thing. The intrinsic rewards of engagement, solving the problem, adding value and working together continue to show greater results than the standard “carrot and stick” approach.
So if, as Pink claims, there is a mismatch between what science knows and what business does, why do we keep doing it? It’s not because leaders are unaware of the mismatch…it has been studied for decades. It might be because we default to a logic that is comfortable and easy. Perhaps we offer incentives because we don’t have the creativity to create business situations that are engaging in other ways. If that’s the case, we are going to have to challenge ourselves in the current business environment to find new ways to engage and motivate since the problems we face are less tactical and more cognitive. Until then we may keep throwing money at internal issues that simply refuse to go away.