Thinking about the way in which large salaries and bonuses are offered to “keep and attract talent”, one would think that you would perform better knowing you would get a huge wad of cash on completion. But things are not always as they seem.
Imagine this:
You are asked to complete six cognitive tasks at work. You will get a bonus equivalent to one day’s work if you complete them on time (or half if you only complete half of the tasks, etc.). In another instance, you will get 2 weeks bonus. And in a third instance, you will receive 5 months of salary. How do you think you might perform in this scenario? Chances are, that you will perform very well in the first two instances and crumble under pressure in the third one. Here’s the science.
Dan Ariely, behavioural economist, talked about the research on bonuses he’s carried out in India on the BBC’s Forum programme last 30th April. His research team set 6 tasks requiring creativity, thoughtfulness, concentration, etc. The tasks were given to people in three groups, offered the different performance-related rewards I have described above: one day’s worth of salary, two weeks and five months.
The results were interesting and cannot be ignored: the difference between the average number of tasks completed when the individuals were receiving one day or two weeks of salary were negligible, presumably because the effort to obtain that extra day of salary is already high and can’t be increased.
But what was even more interesting, given the bonus culture that we still live in, was that the average number of problems solved correctly in the group offered five months worth of salary was lower than in the other groups, only between 40% and 4% of the problems being solved correctly.
The explanation for these results given by Dan Ariely makes perfect sense:
Money can be both a motivator and a stressor.
The thought of a small bonus can be motivating, can give you an extra push to try harder, maybe even fire off some endorphins at the thought of reaching your goal?? But the thought of a large extra bonus can be distracting: what will I do with all the extra cash? How will my life (or the next few months of my life) change? And more destructive of all: what if I miss out on this wonderful opportunity?
And so the brain is distracted by all these questions and cannot focus on the task at hand. (In experiments where the task was physical and not cognitive, performance just increased with reward. Maybe we have less control over our brains than we think.)
This could also explain why so many people end up being offered jobs they weren’t that keen on in the first place. Their brains were fully on the tasks at hand (interviews, tests etc). Compare this to those instances when we want that job so badly that our brain cannot stop thinking about how wonderfully different our life would be if we landed that new position.
More pay will not necessarily lead to more motivation, so why do so many organisations assume they will? (For more on this, refer to Performing for Pay? The Effects of ‘Merit Pay’ on Motivation in a Public Service Marsden and Richardson, British Journal of Industrial Relations June 1994.) Or maybe it’s not just a matter of attracting the “best people”. Nigel Nicholson in his book Managing the Human Animal
I suppose then, as individuals, seeking a sense of balance is healthy – no surprise there. Balance money with purpose; challenge with attainability. No matter how much you want something, the most important thing is to concentrate on the process to avoid our dreams stressing us out.
