As a sports agent who was struggling to retain his last client, Tom Cruise in the movie Jerry Maguire was famously required to scream “SHOW ME THE MONEY” to player Rod Tidwell to prove his dedication.
And while politeness usually prevents us from yelling those same words at whomever is asking us to do something for them, money has long been held up as a key motivating factor.
For good reason, if we do not feel fairly remunerated or cannot support ourselves financially, then our motivation to perform will be low.
But once those factors are taken care of, once we feel we are getting a fair deal and our basic needs for shelter, food and security are covered does money really drive performance?
In fact, the surprising conclusion from behavioural science is that money isn’t that great at motivating behaviour.
Money isn’t a great motivator.
I can hear the ears of CFOs pricking up everywhere.
Here are some of my favourite, somewhat confounding, findings related to money in the workplace.
Non-monetary gifts are better at increasing performance
Researchers from the University of Zurich were interested in whether giving a monetary or non-monetary gift to employees was a better way to increase performance. Study participants who were given a cash reward of 7 euros increased performance by 5%. Not bad.
But, study participants who were given a gift of the equivalent value (a thermos worth 7 euros) increased by 25%!
Money can make us selfish
Across a number of experiments researchers Vohs, Meade and Goode were interested in whether participants primed with money behaved differently to those who weren’t.
The priming was subtle. In one task, for instance, participants had to unjumble sentences (e.g., “high a salary desk paying” became “a high-paying salary”), and in another, a stack of monopoly money was left in the peripheral vision of participants as they completed an unrelated task.
The researchers found that people primed with money were;
- More self-reliant (asked for help less and chose to work alone)
- Less willing to help others
- More physically distant
Reminders of money seem to change the game, turning us inwards rather than outwards, which obviously has ramifications for any team-based organisation.
We think we’re motivated by money, but it can actually impair performance
We think we want cash. Remember the Zurich study into non-monetary gifts? One of the confounding findings was that when participants were offered a choice between cash and a gift, 80% said they preferred money.
A University of Chicago study similarly found that although performance was greater when subjects were treated with a massage rather than money, two thirds of people stated they would have preferred the cash.
So when asked what would motivate us, it seems we are under the impression that cash is king.
It’s tangible, flexible and measurable.
But money can impair our performance.
In fact the London School of Economics has found that “financial incentives may indeed reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace social norms such as fairness. As a consequence, the provision of incentives can result in a negative impact on overall performance”.
Going further, researchers Ariely, Gneezy, Lowenstein and Mazar found that while money was good for motivating routine, mechanical tasks (like pressing a key on a key board), it reduced performance for cognitive tasks (like an adding task).
Cash may be king, but it’s a scary ruler who makes us selfish and inhibited.
Monetary compensation in your workplace
So where does that leave us when it comes to monetary compensation in the workplace?
- Money is your ticket to play – pay people poorly and they’ll be so focussed on money that their performance and satisfaction will suffer
- Reminders of money shift people from collective to individualistic goals – a problem if you rely on teamwork – and can compromise ethics and sense of fairness
- Monetary rewards increase pressure and impair cognitive and creative thinking, and doesn’t most of today’s work require just those skills?
- People might say they prefer money but non-monetary gifts are better at stimulating reciprocity
I’ll be talking about these and other surprising findings in my upcoming workshops for CPA Australia on how to use behavioural techniques to influence performance outcomes. If you are interested in this type of training yourself just drop me a note and I can let you know what we cover.
Bri Williams runs People Patterns, a consultancy specialising in the application of behavioural economics to everyday business issues.