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Pizza, Praise, or Money - what raises productivity most?

What is it that motivates workers to do better work? Well, Dan Ariely (you should be familiar with Dan if you've read some of the other pages) aimed to find out. 

Ariely worked with Intel (Israel) to test out the effect of different rewards on employee productivity. 

He carried out the test at a semiconductor factory, where productivity can be tangibly measured (i.e. the number of computer chips produced per day. This is as compared to other types of work, where outcomes are difficult to measure) At this factory, workers worked in shifts - the standard work cycle lasted eight days - each workweek was composed of four days of twelve-hour shifts, followed by four days off.

 

Ariely set up different reward systems:

  • Monetary bonus: On the first day of the work cycle, employees in this condition were greeted by the following message from their boss: “Good morning! If you reach or exceed X chips today, you’ll receive US$30 in cash. Good luck!”

  • Pizza voucher:  If you reach or exceed X chips today, you’ll receive a voucher for pizza. Good luck!”

  • Compliment: In this condition, workers were greeted by a message that informed them that if they reached or exceeded their production target, they would get a text message from their boss telling them “Well done!”

  • Control: In this case, chip makers received no note and were offered no bonus.

Ok great. So which reward do you think enhanced productivity the most? Have a guess. 

1.  US$30 bonus 

Money

2.  Praise from boss

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3.  Pizza voucher

Image by Vita Marija Murenaite

4.  Control group - no reward

Image by Byron Sterk

And the results?

First, let's see what the HR managers in Intel predicted would have the greatest effect. They thought that the rewards would rank as below, in order of effectiveness:

1) the monetary bonus

2) Pizza voucher

3) compliment
4) control group 

And the actual results?

  • On day 1,

    • Pizza Voucher increased productivity by 6.7%

    • Compliment: 6.6%

    • Money: 4.9%

    • Control: as per normal (it's a control group!)

  • But remember the workweek is 4 days long. Were there any changes to performance after the first day? Yes, you bet.

    • Over the next 3 workdays, the productivity of those who received the compliment and the pizza voucher slowly dropped each day until it hit the base productivity rate of the control group by the end of the workweek.

    • Between the 2, the compliment had higher productivity rates over the next 3 workdays.

    • What about the monetary bonus?

    • On the second day of the workweek (the day after the bonus was given), those who received a monetary bonus performed 13.2% worse than those in the control! 

    • On day 3, it was 6.2% worse than the control; and on day 4, 2.9%.

    • Overall for the week, the monetary bonus resulted in a 6.5% decrease in performance, compared with the control (not to mention the compliment and the pizza voucher conditions)

    • In other words, the company would have paid more money for poorer performance. 

 

There are a few lessons from this experiment. 

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  • The design of the experiment is worth noting. The monetary bonus was paid on the first day of the workweek. What this led to was that after the day of bonus, workers lost motivation on days 2, 3, and 4, when they couldn't get a bonus. What if the experiment paid out the bonus on the last day of the workweek?


    Well, we don't know - that's an experimental limitation. However, the results give some grounds for us to assume that even if the experiment was changed where the bonus is paid out on the last day of the workweek, the worker might simply work less hard on the first 3 days, (ie, the results of this experiment, but reversed). What if a bonus was paid only if the worker hit a certain target for the entire workweek rather than for a single day? Again we can't tell - although that might no longer feel like a bonus per se, but rather a tiering of the basic salary structure. 
     

  • We often assume people would be motivated by more pay, but the opposite turned out to be true. In the point above, we covered that if the experimental design was tweaked, perhaps the monetary bonus might have been more effective. However, we should not forget that on day 1 of the workweek, in an even contest between the different rewards, the monetary bonus was the least effective of the rewards. It is worth considering if our intuitions about money are really accurate. 
     

  • What's the difference between the pizza voucher (I must qualify that the exprimenters really wanted to give out physical pizzas - which would very likely have been even more effective, but the logistics was just too difficult) and the monetary bonus? How can the pizza voucher produce better performance, when the monetary bonus can also be used to buy pizza, or other types of food if you don't like pizza?

    At a simpler level, pizza is visible and sharable. Imagine the worker using the voucher to bring a pizza home for his family, who would ask him, wow you brought pizza back today, why? And the worker is able to tell his family - "I got this pizza as a bonus for good work." It allows his family to share in his good work and acknowledgement, even to look up to him

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Intrinsic vs extrinsic motivtion

 

  • Ok, we can see the appeal of bringing a pizza home, but this still doesn't answer our question - why does a pizza (or pizza voucher) work better than more money, which you can use to buy a pizza (or something else)? 

  • At a deeper level, it is how the reward is perceived. Here we introduce the concepts of intrinsic vs extrinsic motivation:


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  • The answer comes with the desire of most people to seek think broadly about these findings, it seems that we don’t experience our work in day-to-day transactional terms. We don’t measure our lives out in coffee spoons, as T. S. Eliot wrote, even in the most quotidian work. Instead, we think and behave on a longer time scale, which means that managers need to take into account (and measure) not only the direct effect of different incentives but also their delayed and enduring outcomes. e more a company can offer employees opportunities for meaning and connection, the harder those employees are likely to work and the more enduring their loyalty is likely to be

  1. these findings suggest that when we are in the midst of a task, we focus on the inherent joy of the task, but when we think about the same task in advance, we overfocus on the extrinsic motivators, such as payment and bonuses. is is why we are not good predictors of what will motivate us and what will crush our motivation. is inability to intuit what will make us happy at work is sad. If you are a new college graduate considering your options, you might go for the high-paying job at a bank instead of pursuing your dream career as a jazz musician. Certainly, you will be able to afford more stuff and a nicer apartment if you take the bank job, but as you mull over these two options, are you overestimating the extrinsic motivators and underestimating the intrinsic joy of work?

 

Now this might not make complete ratioanl sense  be getting a bonus, You ended up paying a bonus and getting worse performance. Clearly, your intuitions about bonuses are not exactly on target. Why not let us test the effect of monetary bonuses throughout the company, including the bonuses for top management?” As you might have guessed, the executives had no interest in this research path.

These results suggest that there is a lot more to work than merely the opportunity to earn money in exchange for labor.

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