One of the themes I've been blogging about, and has prompted a lot of response, is how difficult it is to design a financial incentive system that motivates the desired behavior -- see my recent post on perverse incentives at Washington Mutual. The theme in that and related posts, and in so many of your thoughtful comments, is that using financial incentives to motivate individual behavior often backfires because they lead people to focus narrowly on the rewarded behavior while ignoring other behaviors that benefit colleagues or the organization, or worse yet, engage in behavior that damages organization organizational performance. So for example, software engineers who are paid for finding bugs may respond by introducing bugs so they can be paid to fix them -- as demonstrated in the Dilbert cartoon I discussed. Another issue with individual incentives is they sometimes lead to destructive individual competition, or at least, a refusal to help one's colleagues succeed because there is no reward for doing so.
In my last post, I suggested that the problem with money is that at times it is too powerful a motivator, not -- as some psychologists have suggested -- it is too weak a motivator. I was focusing on the design problems associated with linking financial rewards to desired individuals behaviors in ways that don't undermine group productivity, group cooperation, learning, and so on. I didn't realize, however, that there is a stream of research showing that just getting people to focus on money makes them less cooperative and more individualistic in focus. Along these lines, I ran into a fascinating set of nine studies packed into a 2006 Science magazine article called The Psychological Consequences of Money by Kathleen D. Vohs and her colleagues. They used a series of "primes" to turn research subjects' attention to money (showing them lists of words about money, putting piles of monopoly money in front of them, showing them films that talked about money) and then created a host of little challenges, ranging from whether they would ask or gave help while struggling to solve an unsolvable to whether they helped an (apparently) blind person who accidentally dropped a bunch of pencils. Note there we no incentives manipulated in these studies, just a focus on money.
The pattern of results is pretty scary and has some interesting implications. Compared to control subjects, those primed to focus on money:
1. Were less likely to ask others for help
2. Less likely to give others help
3. Preferred to work alone
4. Preferred to play alone
5. Put more physical distance between themselves as a new acquaintance
The little study with the blind person was especially interesting. Subjects played Monopoly for 7 minutes and then the board was cleared by the experimenter, and regardless of how the game had gone, they were left with either a pile of $4000 in Monopoly money, $200, or no money. Then the (apparently) blind person came in and "accidentally" spilled a pile of pencils -- those subjects with a big pile of fake money in front of them picked up significantly fewer of the blind person's pencils than those with a small pile or no pile at all.
This is, of course, just a series of contrived experiments. But there are also field studies being done along these lines that tell a similar story. The implications for how to manage people and use rewards are troubling. Of course, nearly all of us need to work to earn money to live -- so removing money from organizational life is impossible. But these studies and related research suggest that to the extent money is made more vivid, it makes interdependent work more difficult to accomplish. Indeed, one of the central concepts Hard Facts is the attitude of wisdom, the notion that wise people have the courage to take action but the humility to doubt what they know. Wise people also realize that, for collective success to happen, there will be many times when they need to ask others for help and, conversely, that there will also be many times when they ought to offer others their help. Unfortunately, if these experiments generalize to the real world, they suggest that making money more vivid may, in fact, rob people of their wisdom.
I may be pushing these findings too far, but it is always interesting to think about the implications of research. I would be most curious how others react to this research, and in particular, what you believe the implications are for designing motivation systems for organizations and teams.
P.S. Professor Vohs has a great website as it provides links to pdfs of all her papers and, if you are interested, you can see that she has a fascinating stream of research on money -- examining issues such as whether social rejection leads people to shop more and whether focusing on money can reduce subjective physical pain. She is prolific and imaginative researcher.