In this blog, I want to reflect about what money is and how it affect people and organizations.
Money is both everything and nothing. Money is nothing more than a piece of paper or a digital number and the value in itself is zero. What makes it valuable is that people believe that money has a value. The minute people no longer believe in a currency, the value drops. Money need trust like a flower need water.
Money has a different meaning for various people. For some people money is only a tool to survive. You need it to buy food, water and a roof above your head. For others money is a lot more than that. People who already have more money than they can spend still chase more money. Why is that? It is about what money represents. Money is a symbol. It can symbolize success and maybe even happiness. People buy fancy cars like Porsche and watches like Rolex to show people their superiority. Money is power.
Money is a powerful tool, because it represents many things and have different meaning for various people. Almost everyone want more money, even though a lot of people will not admit it. This is why many organizations use money as a tool to incentivize workers to be more effective. It is almost a general understanding in the society that if you want something done, you incentivize with money. The question is, does it work?
In the presentation, “The puzzle of motivation”, Dan Pink brings up a very interesting theory or fact as he calls it. He claims that incentivizing people with money only works for easy tasks where there is a clear set of rules and a clear destination to go. When you have to think and you need creativity, this incentivizing actually has a negative impact. Various experiments show that this is indeed true, like “the candle problem” and different tasks given to MIT-students. Money as an incentive dulls thinking and blocks creativity.
Personally, I think this theory is very interesting and I believe it is true in many cases. Because money is as powerful as it is, it makes people too stressed and unable to think creatively and outside the box, and almost every organization need creative thinking in the 21th century. As Dan Pink says in his presentation, there is a mismatch between what science knows and what businesses does. Why is this? Maybe money has become such a big part of our society that we are unable to adapt. That it has become a part of human nature to use money as an incentive to get things done.
I have read the book Freakonomics that have many interesting facts about behavioral economics that really makes you think. One interesting case that I read about in the book was about kindergartens in Israel. A big problem was parents who were late to pick up their kids. The employees had to stay after the kindergarten had closed because of late parents. To solve this problem, the kindergarten introduced a fine for every minute a parent was late to pick up their kids. What happened? The parents were even more late to pick up their children! This shows that money, as an incentive, is not always the solution. The fine reduced the moral issue of being late. We can see the same result when you get money by giving blood instead of giving it free. When you are paid, less people give blood because it is no longer such a good deed.
I believe that it is important to be aware of what affect money has on people and organizations. To measure if money as a reward reduces or strengthens effectiveness in different situations and then adapt to the results. Incentivizing with money where it works, and find other solutions where it does not work. If businesses and the society in general is able to do that, I agree with Dan Pink. I think the world can become a better place and that we can strengthen the economy. More awareness around this topic is necessary to achieve that goal.
Written by Mathias Aleksander Berntsen
Multimedia MNO3301: The puzzle of motivation