Putting a Price on Praise – An inquiry into motivational factors

Pink and Ariely, while both giving engaging and enlightening presentations which differed so much in style – Pink’s confident, punctuating exclamations contrasting with Ariely’s deadpan humor – had the same core conclusion: Traditional methods of monetary rewards were not the key drivers of motivation. While this was in itself intriguing, a more practical question arose:

Does this imply that money has become less important as a tool for motivation? If so, could organizations benefit from the same amount of motivation and productivity by paying their employees less in monetary terms?

All that glitters is not gold

First, an examination of the idea that money has actually diminished in importance as a tool for motivation is required.

Pink claims that financial incentives only work when the task at hand encompasses a clear direction and goal, while requiring little or no cognitive process. In jobs involving uncertainty and independence to even a small degree, the three main factors which drove motivation were autonomy, mastery and purpose. These intrinsic factors were what caused high performance. Carrot-and-stick approaches, on the other hand, actually stifle creativity and may result in negative effects on performance.

Similarly, Ariely demonstrated through his two experiments that motivation depended primarily on constant progress and improvement in addition to finding a sense of purpose and meaning in the work. A sense of ownership or receiving recognition for the work would also cause one to value it more, and be more motivated to do put in additional effort.

How do the claims that these two presenters make compare with existing theories on motivation?

The Self-Determination Theory essentially covers the points that both have made. The proposition that people prefer to feel they have control over their actions coincides with Pink’s belief that autonomy is a crucial factor in motivating people. With an increase in extrinsic rewards, employees may tend to feel that they are doing well because of the organizations want, and not because of their own intrinsic desire to excel.

Similarly, Ariely’s Lego experiments demonstrated the idea of self-concordance. The alignment of intrinsic interests with the task at hand tends to produce better results simply because employees enjoy the process of striving towards their goals.

These theories seem to support the idea that financial rewards can be substituted to some extent by giving praise and recognition, autonomy, and the opportunity for constant improvement. In some cases, increasing monetary incentives may even be counterproductive.

Is cash still king?

On the other hand, money still has a fundamental role to play. Pink makes the concession that at the most basic level, financial incentives are still necessary for every job, and are likely to still play a significant part in motivating employees to work. Similarly, the oft-cited Maslow’s Hierarchy of Needs lists physiological comforts as the most crucial , and money is a necessity for the attainment of these most basic of needs.

But what about at higher income levels? It appears that money increases in importance  together with its quantity according to Devoe, Pfeffer and Lee. Through their paper ‘When does money make money more important?’ , they concluded that, depending on the source of money, individuals could place a higher value on monetary rewards because they see it as a reward for a demonstration of competency and effort on their part.

This seems to run contrary to the idea that money is not an important motivational tool.

Furthermore, people are still most likely to utilize tangible financial rewards as a benchmark for comparison in both the Equity Theory and the Expectancy Theory. The Equity Theory cautions us about the loss of motivation amongst employees should there be a perceived lack of organizational justice, while the Expectancy Theory highlights the need for a reward that clearly links to the effort or performance on the part of the employee. The provision of autonomy, mastery, meaning and other intangibles are unlikely to be able to rectify discrepancies causing loss of motivation due to the aforementioned scenarios.

‘Praise is Free. Or is it?’ – Concluding thoughts

In light of the above discussion, I feel that our course materials in OB thus far have highlighted that monetary rewards  are likely to always be integral means of motivating employees. Because of its reflection of the value of an individual, it is not merely a transactional tool. It could be closely tied with social needs, esteem issues, and could even be important for self-actualization. The true value of money lies in its intangible, intrinsic worth.

To answer my own question, it is clear that to an extent at least, financial rewards can be substituted. I would be willing to take a pay cut if a job could offer me more autonomy, meaning, and resonate with my intrinsic values, and I am sure that many others would feel the same way. In addition, I would probably be more productive and bring more monetary value to an organization which meets these needs.

What would be truly intriguing (and probably impossible) would be to conduct a study to put a price these intangibles. Does autonomy boost the bottom line of the company? Are commendations a good substitute for monthly bonuses? Is praise truly free?

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