Why external rewards undermine internal motivation

In my last post, I mentioned the issue of lack of trust in institutions. It appears that our world is increasingly running on financial incentives and regulation. Psychologist Barry Schwartz states that this undermines our will to do the right thing.

This week Dr Todd Cameron, GP and practice owner in Victoria, posted an excellent four-minute LinkedIn video about why financial incentives are not as effective as we sometimes think. He mentioned the following issues with financial performance systems:

  • They assume people are lazy
  • They are not supported by scientific evidence
  • They ignore activities that are difficult to measure
  • They reduce the flexibility of organisations
  • They take away resources for system improvement
  • KPIs often work against each other or against other goals, values or purposes
  • KPIs can undermine collaboration.

Research confirms that incentives, big or small, usually backfire. Like punishments, they affect internal motivation and creativity. Social scientist and author Alfie Kohn wrote about the ‘bonus effect’ in Psychology Today:

“When people are promised a monetary reward for doing a task well, the primary outcome is that they get more excited about money. This happens even when they don’t meet the standard for getting paid.”

Kohn states that rewards not only make people lose interest in whatever they had to do to get the reward but incentive systems also reduce the quality of their performance.

I believe Todd is right, money should be the byproduct of doing a great job. Pay is clearly not a motivator to improve performance. Most people get out of bed in the morning because they want to do the right thing – this is usually something we’re good at or passionate about.

Great examples and a work environment that gives people freedom and sets a clear direction at the same time are more powerful than monetary bonuses. Todd recommends that KPI funds should be used to improve systems and collaborative platforms and that targets should not be tied to financial rewards.

What really matters

Dying is an intense sad process, but there is another side to it as well: people often take the opportunity to reflect.

As a doctor I have the privilege to talk to people who are nearing the end of their lives. A while back I asked one of my wonderful 85-year old patients what had been most important in her life.

She didn’t need much time to think, and said: “That has to be my family, doctor, and the move from England to Australia with my husband.” Her loved ones, and the journey that changed her life – she couldn’t have been more concise.

I asked myself: what matters most? I found three inspiring life lessons.

#1: Achieving childhood dreams

Randy Pausch was a professor in computer science who died of pancreatic cancer. He became well-known after he gave a lecture titled The last lecture: Really achieving your childhood dreams. It went viral on YouTube.

In the video below Pausch gives another, shorter, inspiring speech to university students about how to live your life well by nourishing relationships with others and expressing passion. Pausch died 68 days after giving the speech.

#2: Don’t be afraid to fail, be afraid not to try

“If today were the last day of my life, would I want to do what I am about to do today?” Apparently Steve Jobs asked this question everyday, and it has become a guiding principle for many. Like Randy Pausch, Jobs was looking for passion: “There is no reason not to follow your heart,” he says in one of his famous speeches. Jobs reminds us that all negatives, like fear of embarrassment or failure, just fall away in the face of death.

#3: Begin with the end in mind

One way of following your heart is to begin with the end in mind. This principle is very similar to Steve Jobs’ philosophy, and it’s habit two of Covey’s famous 7 habits of highly effective people:

(It) is based on imagination – the ability to envision in your mind what you cannot at present see with your eyes. It is based on the principle that all things are created twice. There is a mental (first) creation, and a physical (second) creation. The physical creation follows the mental, just as a building follows a blueprint. If you don’t make a conscious effort to visualize who you are and what you want in life, then you empower other people and circumstances to shape you and your life by default.

A patient once told me that he and his wife took their four-wheel drive and caravan five times on a trip around Australia. I said I’d love to do the same one day but that five times was a hard act to follow. He looked at me and replied: “Aim for it.”

When I listen to my terminally ill and elderly patients, they remind me – like Pausch, Jobs and Covey – to keep on trying, have fun and be there for others.