Are you in the constant quest to optimise the performance of your team or organisation? Do you believe that incentivising employees with monetary rewards is the ultimate solution? Prepare to have your preconceived notions challenged. The science behind motivation is far more intricate and, frankly, quite surprising. Here, I delve into groundbreaking research that uncovers the real drivers of performance. Keep reading if you're ready for a transformational approach to boosting productivity and engagement.

The Illusion of Monetary Incentives

The conventional wisdom within most organisations is simple: offer people money, and they will perform better. This is rooted in the classical economic theory of rational agents maximising utility. But here’s the kicker: the data tells a different story. A study conducted at the Massachusetts Institute of Technology (MIT) revealed that while monetary rewards improved performance for mechanical tasks, they had the opposite effect for tasks requiring even rudimentary cognitive skill.

Example: The Software Development Team

Imagine you're leading a team of software developers. You decide to offer significant bonuses to those who can write the most lines of error-free code in a week. Initially, productivity soars. But soon, you notice the quality starts to decline. Bugs are more frequent, and the team seems less collaborative. Why? The focus shifted from problem-solving and creativity to merely churning out lines of code. The incentive you thought would improve performance actually undermined it.

The Triad of True Motivation: Autonomy, Mastery, Purpose

So, if financial rewards aren't the key to enhancing performance for complex tasks, what is? Research points to a triad of factors: autonomy, mastery, and purpose.

Autonomy

Autonomy is the human desire to direct our own lives. Traditional management styles often conflict with this intrinsic motivation. For compliance, management works; for engagement, self-direction is superior.

Real-world Application: Atlassian's Autonomy Day

Atlassian, an Australian software company, grants its developers a day each quarter to work on any project they choose. The result? A plethora of innovative solutions and improvements emerge, all from granting just one day of complete autonomy.

Mastery

We have an innate desire to get better at things, which is why people engage in hobbies like playing musical instruments. This drive for mastery is a powerful motivator in the workplace as well.

Real-world Application: Upskilling Programmes

Imagine introducing an upskilling programme in your organisation, where employees can dedicate time to learning and mastering new skills relevant to their work. Not only does this contribute to personal development, but it also adds value to the organisation.

Purpose

Increasingly, people seek to be part of something larger than themselves. Companies that articulate and operate by a transcendent purpose are finding greater levels of employee engagement and performance.

Real-world Application: Aligning Company Goals

If your company's purpose is to revolutionise healthcare through technology, every project and task should be aligned with this overarching objective. Employees should not just see their work as tasks but as contributions to a grand, transformative goal.

The Performance Paradox: A Call to Action

The evidence is in. We are not just profit maximisers; we are purpose maximisers. Monetary incentives can only take us so far. For sustainable, long-term performance improvements, we need to focus on autonomy, mastery, and purpose.

Are you ready to make the shift? To re-evaluate your incentive models and introduce more human-centric approaches to motivation? The time is now. Let's change not just the way we work, but also the way we think about work. And in doing so, we make not just our organisations, but also our world, a little bit better.

Next Steps

Want to learn more about increasing performance? Check out these links:

Drive: The surprising truth about what motivates us - Video

Drive: The surprising truth about what motivates us - Book

Large Stakes and Big Mistakes

High Performing Teams Characteristics - 15 Things All High Performing Teams do

10 Proven Strategies for Boosting Team Performance

To find out how PerformanceNinja could help you with increasing performance, book a free strategy call or take a look at our GrowthLab.