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Thoughts About Money and Motivation

Posted by MacZad
Jun 13 2012

The need to richly reward the plutocrats is standard propaganda for them and their apologists, and the conventional wisdom is that people are more highly motivated and do better work if they are rewarded with more money.

Well it turns out that it's true - and it isn't. Many studies have been done on money as a motivator and they show that it's a good motivator for tasks that are essentially mechanical ones - like getting roofers to install more shingles per hour. However, if the tasks are ones that require even a little higher-level thinking the answer is more complex. If brainpower is important to the task more money produces better results up to the point where ones' basic needs are essentially satisfied. However, surprise, beyond that point using money as an incentive produces poorer results, and other incentives become better motivators.

Perhaps that's why "The London Whale," a trader in J. P. Morgan Chase's London office, recently lost 2 billion dollars (Update 7/16/12 - It's now up to 7 billion) for the firm - a little too much dollar incentive dangling before him? Could this possibly mean that companies (and society) would do better if their executives were paid less?

Here's the great 11  minute RSA animation on this subject that was the inspiration for this post.

It shows that Autonomy - Leave me alone and I'll do it better, Mastery - I want to improve my skill at this task, and Purpose - I want my work to make a real contribution are the best motivators where brainpower is involved. The illustration about open-source software toward the end is great.

However, despite the studies it seems to me that in many corporate executive suites and particularly on Wall Street there are too many sociopathic individuals and too often their Purpose is: I want my work to make an immediate contribution to my bank account irrespective of the impact on others. If, as the studies show, more money does not produce the best results in these brainpower-intensive environments perhaps this is one of the reasons why we have so many frauds, panics, crashes, etc.

Sociopaths in business should be a good topic for a future post.

Categories: Miscellaneous, Seeking Truth - Debunking Dogma