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Why You Should Be Careful Using Money As An Incentive For Performance Improvement


This article cites Dan Ariely's research into the effects on monetary incentives on people's performance and the surprising results. I first heard about this in an online video of Dan Pink's and he included references to Ariely's work in his great book 'Drive.' You should check out both Pink's book and Ariely's 'Predictably Irrational.' Impactful research told engagingly.

Broadly, money works fine as a performance incentive in limited situations. For dull, linear, routine processes where 'more' productivity is easily produced by 'more' effort. The moment any degree of cognitive processing is required at-risk extra money becomes, at best, a distraction. Mostly its impact is negative.

Money is what 70-year-old psychologists refer to as a 'hygiene factor.' It won't motivate anyone but the absence of it will demotivate people.

I'm looking at a big pile of absent money right now and it is, indeed, highly demotivating. Oddly though it has motivated me to scribble out a quick blog post. I suspect there is a strong correlation between my blog productivity and money absence.