Rewards Make Performance Worse

Imagine yourself standing in the middle of a large networking event. You are surrounded by hundreds of people. You reach into your pocket and pull out a handful of your own business cards. Then, with all of your might, you throw that handful of business cards straight up into the air and let them fall to the ground like snowflakes. Then, you stand back and wait for people to pick up your business card. What are the chances that people will call your phone number to place an order for your product or service using this model?

This is exactly the same sales business model that companies are using worldwide: make a cold call, throw a business card at the prospect and rush back to the office and wait for the phone to ring. Essentially it's the same as throwing a handful of business cards into a crowded room. And yet, sales managers still believe in cold call competitions: rewarding salespeople for knocking on the most doors in a day. They believe that by handing out prizes and incentives for knocking on doors that their business will increase as a result.

Dan Pink, former speechwriter for Al Gore, is now studying motivation in the workplace. What he and many other researchers and economists have found is that rewards and incentives do not work. Perhaps small incentives work a little bit but large incentives actually make performance worse. In fact the bigger the incentive, the worse the performance. As Pink says, "there is a mismatch between what science knows and what business does."

So, what does business do? The same thing it is always done: offer incentives for performance. In other words, business holds onto an attitude that says, "don't confuse me with the facts because I have already made up my mind." But now here's the strangest part, business will offer incentives for out-of-the-box thinking. Do you see the problem with this? Incentives retard thought. And the bigger the incentive the less likely someone will come up with a solution.

So now even a bigger problem exists because of the findings that incentives retard performance: there are incentive companies that have built their survival on the misconception that incentives improve performance. But science and research prove otherwise. In spite of these findings, you may still receive a telephone call from an incentives company offering their services to improve the performance of your people. Incentives companies were formed on opinion and not on fact. How many other companies do you deal with whose very business models are based on opinion and not fact?

You need to see the video for yourself. The video is from a TED conference and runs 18 minutes in length. Might I suggest that you close your office door, put your phone on voicemail, turn off your Blackberry and give your undivided attention to this video. It is important. Findings like this will change your attitude about what you believe to be true and the way business gets done. Ignore this video and its findings and you may actually be impeding the performance of your people. This is an Attitude Adjustment of monumental proportions.



http://www.ted.com/talks/dan_pink_on_motivation.html
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