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Business News/ Opinion / Does bonus reduce motivation to work?

Does bonus reduce motivation to work?

Does bonus reduce motivation to work?


Maybe it never was. We fool ourselves by linking our jobs to money. Research over the last two decades shows that money is not the motivator we thought it to be. Well, maybe it is in the first few years of a career, but by the time age 35-40 walks up to whisper that we are approaching mid-career, the motivation has changed. Says a UK study titled Worthwhile Work from CHA, a workplace communications consultancy: “Over three quarters of working people in the UK are concerned that the job they do should be worthwhile and almost half hanker after a job that is more worthwhile than the one they have at the moment." As the age bracket rises, money recedes further as the motivator. It comes a third, fourth and fifth, after competency, contributing to the society and pride. Once the basics of a middle-class life are in place, money as a motivator to go to work each day just does not sing loudly enough. In a study conducted by the Families and Work Institute in 1992, a randomly selected national sample of 3,400 men and women ranked salary 16th on a list of 20 reasons for taking a job. Upfront were what work they did, ownership of the work, open communication and an opportunity to gain new skills.

Also Read Monika Halan’s earlier columns

If the link between salary and work satisfaction was already tenuous, emerging bodies of work now sever the last ties of using money as the fig leaf for what we do in the workplace. There is increasing evidence that financial incentives may actually reduce an employee’s motivation to work. Work at the London School of Economics, that recently held a seminar where the results of 51 independent experimental studies of using financial incentives to motivate employees, showed that such incentives reduced the desire to complete a task and the pleasure that work gave before the incentives were introduced. Behavioural economists, who are trying to find the humanness in cold rational mathematical economics, are at the forefront of documenting this.

Duke University professor Dan Ariely (who works across three departments—business, economics and cognitive neuroscience—and is a founding member of the Center for Advanced Hindsight) and colleagues decided to test if financial incentives increased or decreased outcomes and performances. As an aside, watch Ariely on TED at tiny for a fascinating discourse on how the human being operates. Ariely and his team chose to work with rural poor in India where financial incentives should, theoretically, be the key motivator. There were three levels of payments: Rs4, Rs40 and Rs400. A set of nine tasks was given and performance was linked to incentives. The tasks included problem solving, some were skill-based and others needed creativity. In eight of the nine tasks, the promise of a bigger payoff actually reduced performance. To remove any bias of low income or culture, the same experiment was conducted on the other side of the world with students at the Massachusetts Institute of Technology (MIT). The two payoffs were $60 (around Rs3,000) and $600 (Rs30,000). The results remained the same—incentives reduced performance.

Then why this managerial obsession with incentives and workplace “best employee" contests? It seems that our education and workplace structures are still built around outdated Western research on rodents. Place a piece of cheese and watch the rat run to it.

In 1938, Edward Tolman, a well-respected US psychologist, wrote in the Psychological Review: “I believe that everything important in psychology (… save such matters as involve society and words) can be investigated in essence through the continued experimental and theoretical analysis of the determiners of rat behaviour at a choice point in a maze." To transpose what works with rats onto human beings is perhaps the reason why education and the workplace is in such stress. Perhaps our “rat race" still comes from those thoughts. Perhaps money is less important than the idea of money.

Matthijs Cornelissen, founder of the Indian Psychology Institute, says: “The system of rewards and deterrents used in the workplace and in education is based to a large extent on research (that was done mid last century) on rodents. It ignores our basic humanness." So what do we work for and what drives us? Pride, credit, for a feeling of doing something useful, appreciation and contributing to something that is bigger than ourselves. All impossible to quantify by the linear measuring rod of money.

Monika Halan is a certified financial planner and is currently working as adviser, Pension Fund Regulatory and Development Authority. Your comments and personal finance queries are welcome at

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Published: 18 Aug 2009, 10:39 PM IST
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