The Curse of the Economists
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The Curse of the Economists is the belief that money is the way to motivate people. It is some of the time. It is for some people all of the time. But often money is the most expensive way to motivate people.
Dan Ariely covered this superbly in his book, Predictably Irrational. It's a must-read for anyone concerned with marketing or incentive systems. It should be mandatory that every legislator who thinks that incentive pay will solve any social ill read the book before voting.
There are two big dangers with using only money to motivate. One is that you attract people who are motivated primarily by money.
If money lures them to you, money can lure them away. That's true for highly talented people you lure with a high salary or a great bonus package. Your competition can do the same.
It's also true for customers. If you create customers by using low price as your primary draw, you capture customers for whom it's the most important thing. And, as John Ruskin said, anybody can cut price.
The other problem with using money as a motivator is that you risk replacing strong social norms with weak economic norms. Engagement is a social phenomenon, not an economic one. If you want commitment, if you want differential effort and brainpower, you won't get them with economic incentives.
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Wally Bock has helped people learn to be great bosses for more than a quarter century. His latest book, Performance Talk: The One-on-One Part of Leadership, makes learning key leadership principles almost effortless by teaching through a story and providing lists of resources for further growth.
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For weekly tips and resources pointers, check our Wally Bock's Three Star Leadership Letter.
Click here to find out more about having Wally speak to your company or convention.
Wally - Couldn't be righter in my view. There are more potent alternatives in my book LEADERSHIP: THINKING, BEING, DOING (which have no "collateral damage")
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Thanks for stopping by, Lee. We're in an age where lots of meaningful options matter.
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As usual, great post, Wally.
A couple of thoughts... One coming from experience of having a masters in economics (the dismal science). Speaking from my "education" I learned that we work for money as well as the ability to use money to expand leisure time...
That said, I also look at the extremely misguided belief that people work for money. From my experience as an OD consultant (the optmist science!), I have come to understand that we are all motivated in our own unique way. Call it "Value DNA" if you will...
I am aware of 6 "Values".
1. Utilitarian - the desire for money and efficiency as well as return on investment.
2. Theoretical - the desire for knowledge.
3. Social - the desire to make a difference in the lives of others.
4. Aesthic - the desire for "form and harmony" or beauty in life.
5. Individualistic - the desire to control one's destiny and the destiny of others.
6. Traditional - the desire for a defined system of living.
What am I saying?
If an employee has a high Theoretical Value, to "motivate" them, one might send them to a training seminar.
If an employee has a high Social Value, one might give them a day off for volunteering.
If an employee has a high Individualistic Value, one might give them the opportunity to lead a project as a reward.
That said... There are certain positions such as sales where if you are not driven or motivated by money, you will not be selling for long.
All in all... The thought process that money motivates everyone as a blanket rule is extremely false.
Keep posting Wally!
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Thanks for adding that, Chris. I like the concept of "Value DNA." The people on our teams each have their own unique mix of values/motivators. Part of a supervisor's job is to match the motivator or currency to the person and situation.
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We should differentiate here between what motivates us to come to work and what motivates us at work. For sure, money is a motivator in both categories - it is the main reason why most of us work at all rather than merely pursuing our favorite leisure activities.
However, on the basis that we have to work, money is not the greatest motivator for most people. That honor goes to Job Satisfaction - fundamentally enjoying the job you do.
When I've finished my series on coaching I'll maybe pick up this theme on my own blog.
In the meantime, keep up the great work Wally!
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