What Motivates People to Perform at Their Best?

Dan Ariely is a renowned behavioral economist who teaches at Duke and writes fascinating books about what truly motivates people. His latest tome, Payoff, finds that most businesses are still locked into the mindset that compensation is the real reason people show up for work and the larger the salary, the better the performance will be and the better the results the company will obtain.

 

Ariely does not dismiss the important role of compensation.  However, when businesses place compensation as the be-all and end-all, they dismiss other factors that can have a dramatic impact on team member performance.  Money alone does not make your team happier, more productive or efficient.  Ariely believes factors such as a sense of meaning, making a contribution, camaraderie and a sense of progress and ownership are strong motivators and in many cases as motivating as the compensation that someone receives. 

 

There's more to compensation than "how much".  The "how" can generate excitement motivation and interest and there are also ways that will achieve the exact opposite results.  There are common approaches that actually demotivate.  Ariely uses No Child Left behind as an example.  Most teachers choose their profession because they wanted to help educate the next generation of Americans.  Not too long ago, being a teacher was an admirable profession. No Child Left Behind sends the message that the only thing we care about is performance that we will measure once a year with a test.  No Child Left Behind, Ariely claims, is not about education.  "It's just about performance on this test."   And if kids do well on the test, the teacher is rewarded with a $400 raise.

 

When you set up a criterion that evaluates compensation based on a single test or criterion, you take away ownership, accountability and motivation. 

 

How you present compensation also has an impact on motivation. In research experiments, people were given a job offer and asked how much they would place in short-term savings and how much they would contribute to their 401K plans.  One group was told they would make $35 an hour and another group was told they would make $70,000 a year.  The amounts are actually the same.  Those who were presented the annual wage saved more.  The reason is that people looked at a year as a long-term commitment and the hourly compensation as a short-term commitment.  You get better results when you frame performance with a long-term perspective. If you have hourly workers on your team and want to keep them, next time you conduct a performance review, present their new compensation as an annual salary.