Dan Pink on Why Rewards Don’t Work

Business is rewarding itself to death, according to Dan Pink.

He’s not just talking about ‘fat cat’ pay and bonuses. He’s talking about something much more pervasive – and more destructive.

In this recent TED Talk, Pink questions one of the fundamental assumptions underlying the way most businesses are managed. Here it is in a nutshell:

Performance can be improved by offering rewards for good performance and penalties for bad performance.

Or to put it another way, the carrot and the stick are a manager’s best friends.

It sounds like common sense, doesn’t it? But it’s not true. Except in certain limited circumstances:

‘If… then’ rewards work really well for those sorts of tasks where there’s a simple set of rules and a clear destination to go to.

(Dan Pink TED Talk)

But for more complex, challenging tasks requiring creative solutions, it’s a very different story:

the rules are mystifying, the solution, if it exists, is surprising and not obvious – [for this kind of problem] those ‘If… then’ rewards, the things around which we have build so many of our businesses, DON’T WORK!

This is not a feeling… this is not a philosophy… this is a FACT!

(Dan Pink TED Talk)

In research, offering rewards for success in creative tasks has been proven to damage performance, over and over again. As Pink says in his talk, this is one of the most robust findings in social science. And to judge from the way most businesses are run, one of the most widely ignored.

Pink’s talk was brought to my attention by Sofia and Marelisa (who has written a great post about it herself) in the comments on last week’s article about Johnny Depp. That was the latest of several articles and an e-book in which I’ve explored the effect of extrinsic motivations (rewards) and intrinsic motivations (satisfaction in the work itself) on creativity.

By looking at such diverse talents as a Hollywood star (Depp), a choreographer (Twyla Tharp), a Victorian novelist (Anthony Trollope) and a 21st century marketer (Seth Godin), we have seen how creative excellence comes from pushing rewards to the back of the mind and focusing on intrinsic motivations – such as challenge, learning, flow and purpose.

My e-book on motivation and creativity draws on the research of Theresa Amabile, an expert in organisational creativity who has shown through her research that offering rewards or punishments can be a creativity killer. Her findings are summed up in what she calls the ‘intrinsic motivation principle’:

People will be most creative when they feel motivated primarily the the interest, satisfaction, and challenge of the work itself – not by external pressures.

(Theresa Amabile, ‘How to Kill Creativity’, Harvard Business Review, September – October 1998)

In his TED talk Pink focuses on research evidence from economists and social scientists, but he reaches exactly the same conclusion about the problems of extrinsic motivation:

In eight of the nine tasks we we examined across the three experiments, higher incentives led to worse performance.
(D. Ariely, U. Gneezy, G. Lowenstein, & N. Mazar, Federal Reserve Bank of Boston)

We find that financial incentives… can result in a negative impact on overall performance.
(Dr. Bernd Irlenbusch, London School of Economics)

(Both quotations taken from Dan Pink’s TED Talk)

… and finds the same solution:

It’s an approach built much more around intrinsic motivation, around the desire to do things because they matter, because we like it, because they’re interesting, because they’re part of something important.

(Dan Pink, TED Talk)

Why Motivation Matters in the Creative Economy

If you recall the first article published on Lateral Action (also inspired by Dan Pink) we looked at Why Creativity Is Economic Priority Number One.

The Rise of the Creative Economy means that someone like Lou, whose career plan is based on rewards, hierarchy and ‘cranking widgets’-style productivity, is in deep trouble. The more straightforward the task, the more likely it is to be automated or outsourced overseas.

Offering rewards works pretty well to raise the performance of people like Lou – but in advanced economies, they are becoming an endangered species.

Jack, on the other hand, is primarily motivated by the thrill of discovery and invention. When he decided to quit and set up his own business, his boss couldn’t persuade him to stay, even with the offer of a bigger paycheck and desk.

In the creative economy, companies and countries depend on people like Jack and Marla to dream up solutions to complex creative problems. And the hard evidence of the scientists and economists is that rewards don’t work for this kind of work.

Unfortunately, as Pink says – most companies are apparently ignorant of this fact, and continue to try to ‘motivate people’ with the carrot and stick.

When you consider the economic challenges we’re all facing right now, it’s not an overstatement to say that business is in danger of rewarding itself to death.

Three Keys to Creative Excellence

Dan Pink describes three types of intrinsic motivation that help companies and individuals to improve creative performance:

Autonomy – The urge to direct our own lives.

Mastery – The desire to get better and better at something that matters.

Purpose – The yearning to do what we do in the service of something larger than ourselves.

(Dan Pink TED Talk)

The bad news is that if your company is based on controlling people and has no greater purpose than making money, you’re going to have a tough time competing with organisations that unlock creative talent by inspiring people with a sense of purpose and empowering them to become masters of their chosen field.

The good news is that you don’t have to be a big company to use Pink’s three keys – you can start to do it right now, in your own life. Let’s take autonomy as an example:

How much creative freedom does your current work afford you? If the answer is “a lot”, then make the most of it. If “not much” then you can either push for more autonomy at work – or set up a side project in your spare time, that gives you the opportunity to use your talents to the full. You never know where it might lead you.

Set aside time to try things out for fun and curiosity. Play around with your paints or guitar. Start a blog. Make a video. Go to a meetup without your business cards – just to hang out and enjoy the conversation.

It may feel like you’re goofing off and wasting your time. But the science suggests otherwise.

What Motivates You?

What do you make of the research findings that offering rewards can harm performance?

How important are autonomy, mastery and purpose to you in your work?

Can you think of examples of successful companies driven by intrinsic motivations?

About the Author: Mark McGuinness is a poet and creative coach.