Management Academicians and professionals believe that organizations trying to be rational all the time are in fact aboting their workforce creative thinking initiatives. Here is a summary of an interview with one of those:
Logical thinking has its limits when it comes to motivating your team. In his new book, The Upside of Irrationality, Duke professor Dan Ariely explains how we benefit from the human predilection for irrational behavior. I recently spoke with him about what makes bankers happy, how to thwart creativity, and the reason why big bonuses can have unintended consequences on their recipients.
BNET: What’s so great about irrationality?
Ariely: We usually view it as a bad thing, but it’s what makes us human. We’re more trustworthy than a rational standard economic view would predict. For example, if people decided whether to steal based solely on the rational motivator of not getting caught, there would be much more theft.
BNET: What does motivate people — particularly at work?
Ariely: We work for meaning, not just pay. Often, businesses don’t recognize that. A former student of mine, David, described an experience he had while working as an investment banker that demonstrates this point. He’d spent 10 weeks creating an impressive presentation for an upcoming merger. He emailed it to his boss, who complimented him on his work but told him that the merger was canceled. His efforts had served no ultimate purpose. Suddenly, David didn’t care as much about the project that he’d spent so many hours on. He also found he cared less about other projects he was assigned. He went from feeling useful and happy at work to feeling dissatisfied.
BNET: How could his boss have mitigated those feelings?
Ariely: He might have had David present his work internally. While such a presentation might seem like a wasted hour, it’s not when you consider human motivation and the impact of its absence on productivity.
BNET: Can’t a big paycheck alone provide sufficient motivation?
Ariely: Paying someone more money will elicit better performance as long as you’re dealing with simple, mechanistic behavior — for example, asking someone to jump higher for an increased financial reward. But things become more complex when we want to encourage more than pure effort. For example, we can’t just will ourselves to be more creative. Consider what would happen if someone said, “I’ll pay you $100,000 if you’re funny in the next five minutes.”
BNET: Are big bonuses similarly ineffective at influencing behavior?
Ariely: To test that, I created an experiment that offered participants the chance to earn small, medium, or large bonuses. We did it in India, where the average person’s monthly wage was about $11, allowing us to provide meaningful bonuses.
Participants rolled a die to establish the amount of their possible bonus. They then played a series of memory and skill games that would determine whether they took home the money — sums that ranged from about one day’s pay to five month’s pay. We found that those who stood to earn a small or mid-level bonus didn’t differ much from each other. But the ones who had a shot at the biggest bonuses performed the worst. The higher stakes made them choke under pressure.
BNET: What’s the best way to pay people without stressing them out?
Ariely: One way to keep the motivating element of performance-based payment — but eliminate some of the non-productive stress it creates — might be to offer smaller, more frequent bonuses. Or offer employees a performance-based payment that’s averaged over time — say the previous five years. Regardless of the approach we take, we need a better understanding of the links between compensation, motivation, and performance — one that considers our irrationalities.