It’s not money for starters.
Many organisations still have compensation systems built entirely around the concept of extrinsic rewards.
This is the idea that if you give a rat a reward for performing an action, like cheese if it runs through a maze, then it will be motivated to keep doing that for the reward.
Extrinsic rewards in the workplace are things like pay, bonuses based on performance and punishment, like the threat of being fired for being late to work.
The theory that most of us believe is that if you pay people more you get a more motivated workforce that performs better.
Even better, if you make rewards conditional – i.e, if they meet targets they get a certain reward – that will focus their minds and they’ll perform even better.
Except, it appears that it doesn’t.
A number of studies show that the link between pay and performance is weak, and this is the case around much of the world.
Once you get beyond a reasonable standard of pay, each increase has a temporary and diminishing impact on motivation.
It turns out that for a few weeks after we get a pay rise, we work harder and then the rush fades and we slip back to previous levels of performance.
The next time around, it takes an even bigger pay rise to get the same uptick in motivation.
What’s worse is that if we’re paid to do something we like, we tend to stop doing it unless we’re paid – so being paid for doing what we love could end up stopping us doing it at all unless we’re paid.
That makes sense – we’re paid because if we weren’t we’d be off doing something that we wanted to do, so perhaps we should only take jobs at things we wouldn’t do given the choice.
The worst kind of extrinsic reward, it turns out, is a conditional if-then reward.
Dan Pink, in his book Drive: the surprising truth about what motivates us, writes about experiments showing that when people were paid for completing tasks based on meeting certain performance scores, their overall performance actually dropped.
So, what does motivate us?
That’s where intrinsic motivation comes in.
Kenneth Thomas, in his book Intrinsic Motivation at Work, writes about four characteristics of work that increases intrinsic motivation.
We like working on things that have meaning and purpose. It feels good to know that what we’re doing is adding value rather than being parasitic.
We like being able to choose how we go about things – to use our judgement, select what should be done and in which order. That makes us feel like we own what we do.
We like being able to do things competently and know that we are performing well. This is more about having personal standards and knowing that what we do is good.
Finally, we like knowing that we are making progress – not running all the time to stay in the same place. It feels good to know that we are building something and moving in the right direction.
All this doesn’t say that money doesn’t matter. It does, but not as much as people think.
What’s perhaps more more important is fairness.
We really don’t like being paid less than someone else for the same work.