Pay For Performance Is Obsolete – Part II

There is a mismatch between what science knows about
behavior and what business does.

Extrinsic rewards do work to promote specific behaviors
BUT ONLY in a very narrow set of circumstances.

Research has shown that for tasks with a simple set of
rules and that require “mechanical skills,” extrinsic
rewards work best to achieve desired results.  Example: A
stock broker is told, “Here is a new stock offering.  Go
selling it to X number of people and you will receive X
rewards.”  The rules are clear, the sales process is
rather routine, and the incentives promised for specific
volumes of sales can be a motivator.

But studies have shown that as soon as the tasks require
higher level cognitive skills, the presence of financial
rewards can often result in poorer performance!  This is
part of the reason why salespeople who sell on price are
very seldom successful when transitioning to sales
positions that require them to sell on value.

HR CONTRARIAN POINTER: The secret to high performance in
the 21st century for the vast majority of employees is that
unseen intrinsic drive to be part of something larger than
themselves and to do work because it matters.

The intrinsic rewards that are employed most often are:
1. Autonomy – The urge to be in control of our own lives.
2. Mastery – The desire to get better and better at
something that matters.
3. Purpose – The yearning to do what we do in the service
of something that is larger than ourselves.

If you can combine intrinsic rewards with the blog post
info on 9/9/09 titled, “Incentives Work Best One Level
Up,” you have a powerful tool for reshaping your
organization.

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