I’ve just finished a very good book: The Age of Absurdity by Michael Foley. It goes through various philosophical and other counter-measures to modern unhappiness. It’s very witty and thought-provoking – I can heartily recommend it.
One of those thought-provoking ideas, whilst looking at the ‘absurdity of work’, is how increasing pay doesn’t increase motivation (decreasing it does permanently damage motivation and happiness with the job though). Greater autonomy and more challenging tasks are the only ways to increase satisfaction.
Coupled with that is the perverse way Performance Related Pay (PRP) de-motivates employees.
In theory PRP should cause better work as people want the money, so produce better results. In reality loss of goodwill means that work quality drops.
The psychologist Frederick Herzberg spent the second half of the twentieth century studying work motivation. He discovered 2 main flaws in PRP beyond the basic level “increasing money doesn’t increase motivation” effect.
The first is that it is often impossible to evaluate performance objectively and accurately.
The second is the assumption that if you change one aspect of work, everything else remains the same. In fact everything changes. Employees who fail to receive extra pay immediately stop doing anything beyond the base level of their job, so ‘voluntary’ work actually decreases, when it was precisely the opposite effect that was intended.
Introducing a financial incentive in fact decreases the satisfaction with the work. Psychologist Edward Deci had an experiment where 2 groups of people were given a series of puzzles to do, and upon completion of the task were allowed to continue with other similar puzzles if they wanted. He paid one group – they stopped soon after they finished the allotted tasks; he didn’t pay the other group – they continued doing the puzzles for over twice as long. Over 100 other studies have backed the same financial demotivation result.
In his book Foley relates the personal and uplifting experience of when performance pay was introduced – initially voluntarily – to his university. Managers were confident teachers would sign up for the extra cash, but were entirely disappointed as teachers knew the evaluations couldn’t be accurate and the rankings would be divisive. So management went personally to certain staff to convince them – and were turned down. Eventually, they just started paying certain teachers a performance bonus – only for those teachers to pool the cash and share it out equally amongst staff. Performance pay was rescinded, and never tried again.
(I’m now onto Nudge)