Context

Note

This paper is a scholarly essay arguing why money incentives are not

working for many tasks in 21st century. Managerial work is becoming challenging in
this competitive working environment. It is important to let people realize the
reward system in business needs to be improved. Intrinsic motivations are working
more effectively than extrinsic motivations under certain situation.

How work motivation affects performance:

Extrinsic and Intrinsic motivations

Huiying Zhao
ENGW 3315
Northeastern University

Abstract:
In modern society, the managerial work is becoming important and challenging.
People used to believe incentives could bring higher performance may not apply for
many tasks today. The different types of motivations are essential to achieve
effectiveness in organizations. This paper is going to use the results from different
experiments conducted by several scientists based on the famous experiment called
Candle Problem to show extrinsic motivations are not working in 21st century.

Key word: Work motivation, performance, incentives, and candle problem

When the economy developing dramatically, the speed of life is much faster.

Everyone is walking fast from here to there and rushing to go to work. It is

inevitable to make people feel bored or tired of everything they are working on,
even though they got paid decently. Managerial work is essentially important and
challenging in todays working environment. It is obvious that employees must be

highly motivated to succeed in this increasingly challenging environment. Generally,

motivations like commissions and bonuses are used in business to achieve higher
performance. However, the type of motivations possessed by managers may be a
determinant of their performance and the effectiveness in the organizations.

In the present study, we focus on the consequences of two types of

motivation among managers. These two types of motivation represent key themes
in the working environment. Extrinsic motivation like commissions and bonuses are
driving employees to work. Intrinsic motivation like verbal compliments and perks
are compelling employees to work. There is a huge difference between these two
situations. Under driven to work situation, employees are doing their work only in
order to get the work done so they could get the rewards. However, if employees are
under the enjoyment to work situation, it is totally different because employees are
like to get the work well done. They are enjoying the process of doing their job.
People have best performance only when they love to do it. Managers are pursuing
the best performance out of employees. Nevertheless, most of managers are using
the wrong reward system and keeping fail to get work well done by employees. It is
necessary to learn a new approach to motivate employees to do better.

Reward system in business
In recent years, the competition has been increased in virtually all areas of
business. A successful business requires a great attention to management and an
analyzing competitive strategy, including human resources and rewarding system.
How to sustain trained employee has become a challenging objective. It costs

business a lot money and time to train new employees. As a result, companies and
organizations are trying to sustain and motive employees to have higher
performance by rewarding them.
As a matter of fact, in this rapidly increasing competitive society, money
assures people to get a higher quality of life, so rewards are usually viewed
primarily as the paychecks employees collected every week or month. And reward
system is also developing along the society, as for now, the reward system may not
just be considered as paychecks. An effective reward system could help companies
and organizations to gain higher profits and more competitive advantages.
According to Bowen, A good reward systems drives performance by motivating
workers to achieve new levels of performance, and attracts, retains, and motivates
employees to do their best and stay with the organization (Bowen, 2004). A suitable
reward system is essential to ensuring that an organizations investment in its
employees is managed effectively. However, motivating employees is a challenging
task, since their behaviors are driven by varying needs and desires, and
expectations and perceptions of equity and fairness can vary. Money may not satisfy
everyones needs. Motivation can be either intrinsic or extrinsic. Intrinsic
motivation comes from inside individuals, and is based on their interest and
involvement in the work. Extrinsic motivation is driven based on the goal of
achieving something other than the work itself. The distinction between intrinsic
and extrinsic work rewards was first popularized by Herzberg(Herzberg, Mausner
& Snyderman, 1959).

Science and theory

There is an interesting experiment called candle problem created in 1945 by
a psychologist named Karl Duncker (Duncker 1945). He created this experiment
that is used in many other experiments in behavioral science. The experimenter
brings participants into a room and gives you a candle, some thumbtacks and some
matches, and tells them, Your job is to attach the candle to the wall so the wax
doesnt drip onto the table. The key is to overcome whats called functional
fixedness. The box people see is not only as a receptacle for the tacks, but also can
have other function, as a platform for the candle.

Based on candle problem, there is another experiment using the candle

problem done by a scientist named Sam Gluckberg (Gluckberg 1962), who is now at
Princeton University, US. This shows the power of incentives. He gathered his
participants and told them Im going to time you, how quickly you can solve this
problem. To one group he said, Im going to time you to establish norms, averages
for how long it typically takes someone to solve this sort of problem. To the second
group he offered rewards, If youre in the top 25% of the fastest times, you get five
dollars. If you are the fastest of everyone were testing here today, you get 25
dollars. The result is: it took the second group three and a half minutes longer on
average. In business people wants to get better performance by incentivizing
employees. However, whats happening here does just the opposite. Incentive
doesnt sharpen thinking and accelerate creativity; on the contrary, it dulls thinking
and blocks creativity.

By looking at the science of human motivation, particularly the dynamics of

extrinsic motivators and intrinsic motivators, people can find there is a mismatch
between what science knows and what business does. How we motivate and how
we apply our human resources its built entirely around extrinsic motivators.
However, for 21st century tasks, it doesnt work.

Glucksberg did another similar experiment in a slightly different way. He

presented the problem by separating the box and the tacks. And offered the same
incentives. This time incentivized group had better performance than other group. It
is pretty easy when the tacks are out of the box. It doesnt require creative thinking.

Reward and punishment might work fine for 20th century tasks like this,

which have a clear set of rules and a single solution. However, in 21st century,
people can have certain kinds of accounting, financial analysis, and computer
programming to have an easy way to achieve the outcome. Software can do it faster.
What really matter are the more creative and conceptual kinds of abilities.

To further prove the theory, another experiment sponsored by Federal

Reserve Bank of the United States, conducted by Dan Ariely, one of the great
economists. He and three colleagues did a study of some MIT students. They gave
these MIT students a bunch of games, which involved creativity, motor skills, and
concentration. He offered them three levels of rewards for performance: small
reward, medium reward, and large reward. Highest performance gets large reward.
The result is: as long as the task involved only mechanical skill, bonuses worked as
expected: the higher the pay, the better the performance. However, once the task is
involved cognitive skill, a larger reward led to poorer performance.

There is a mismatch between what science knows and what business does.
There are too many organizations are making their decisions about talent and
people based on outdated method. In 21st century, we have more tasks require
creative abilities. People need a whole new approach to satisfy employees need in
order to achieve higher performance.

Enjoyment of work is the degree to which individuals work because they find
the work itself intrinsically interesting or pleasurable. Managers seek
pleasure or interest from the nature of the work rather than the act of
working. Intrinsic motivation is a key aspect of enjoyment of work (Graves,
L., Ruderman, M., Ohlott, P., & Weber, T., 2012).

Money incentives will restrain individual creativity and performance in jobs

requiring out of the box thinking. As managers they should use intrinsic motivation
such as providing more challenging work to increase the enjoyment of work.
Challenging work makes people release full potential of creative thinking. It also
makes people feel more satisfied in spirit. Accomplishment motivates people do
more work than they used to do. Intrinsic motivation as a new approach to higher
performance in managerial work should be considered as the society is stepping
forward, people are also required to change along with the world.

New Approach

Based on the results that the scientists whove been studying motivation,

they have given people a new approach to get higher performance at work around
intrinsic motivation. Intrinsic motivation is about the desire to do things people
really like them and theyre interesting. As a result, the interesting work matters.
Managers should build motivation to make people have the urge to direct their own
lives, the desire to get better performance at something matters, and the wish to do
something larger than themselves that could benefit the organization.

There is a company Atlassian in Australia has come up with a pretty smart

idea called FedEx Day (Rob Van, L., 2012). A FedEx Day is a 24-hour event in which
employees deliver innovation to the company they work for. A few times a year the
company tells their engineers to go for the next 24 hours and work on anything they
want, as long as it is not part of their regular job. Basically, it is a time that engineers
could do any thing they want. Thus, engineers use this time to come up with a cool
patch for code; some engineers come up with an elegant hack. After that, they
present all of the stuff that they have developed to their teammates, to the rest of
the company at the end of the day. That day is called FedEx Day because everyone
has to deliver something overnight. It is the one-day of intense autonomy, which has
produced whole incredible ideas that might never have existed. As a result, the
productivity goes up with everyone satisfied.

In conclusion, incentives and rewards not always bring higher performance.

It depends on the types of task. Rewarding works as expected on the tasks related
mechanical skill. However, as long as the tasks require creative thinking, incentives

block the process of thinking out of box. In 21st century, the society gives people
more tasks required creative abilities and innovations. Intrinsic motivation is a key
to increase the enjoyment of work in order to obtain higher performance.

References
1. Bowen, R.B. (2004). Today's workforce requires new age currency.
HRMagazine, 49(3) 101-106.
2. Herzberg, F., Mausner, B., & Snyderman, B.B. (1959). Job attitudes: review of
research and opinion, Pittsburgh: Psychological Service of Pittsburgh.
3. Duncker, K. (1945). On problem solving. Psychological monographs 58.
4. Glucksberg, S. (1962). The influence of strength of drive on functional
fixedness and perceptual recognition. Journal of Experimental Psychology 63,
3641
5. Graves, L., Ruderman, M., Ohlott, P., & Weber, T. (2012). Driven to Work and
Enjoyment of Work: Effects on Managers' Outcomes. Journal of
Management, 1655-1680.
6. Rob Van, L. (2012, January 1). Lighting Corporate Passion: Everything you
need to know about FedEx Day. Retrieved March 26, 2015, from
https://www.scrum.org/Portals/0/Documents/Community
Work/Scrum.org-Whitepaper_FedEx Day - Lighting Corporate Passion.pdf

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