Numerous studies have shown that intrinsic motivators, such as peer recognition, a feeling of mastery or purpose and potential, are far more effective than tangible, extrinsic rewards, such as higher wages, bonuses or commissions, for a job well done.
This is particularly true of tasks requiring cognitive skills, like creativity and problem-solving—largely the domain of knowledge workers—as opposed to mechanical skills, things like repetitive assembly work or physical labor. In fact, in his light-hearted but extremely enlightening TED Talk, “The Puzzle of Motivation,” motivation expert Daniel Pink outlines several experiments and studies that have even shown extrinsic rewards hinder creativity and problem-solving because the reward narrows our focus, restricting the framework we approach challenges from.
This theory has proven true when applied to real-world business. As Pink cites, an examination of over 50 studies of pay-for-performance programs inside companies by the London School of Economics revealed that “financial incentives can result in a negative impact on overall performance.”
So, why is it that businesses remain so dedicated to the pay-for-performance model? Why aren’t more companies using intrinsic motivators to incentivize their people?
The answer: because it’s so hard to measure and track results. Extrinsic motivators are easy: increase the salary by X amount of dollars and see if it drives X percent in performance improvements. But what if it doesn’t? Then what?
Measuring intrinsic motivation allows you to gain a fuller perspective into all of the areas employees are performing in—not just at the bottom line. . .
Aside from the studies proving intrinsic motivation works, here are three reasons why measuring it matters:
- To gain genuine benchmarking and feedback. Most HR teams rely on surveys and self-reporting to assess motivation, but these are not always accurate. Respondents will either say what they think the company wants to hear, or the surveys are conducted too far after the moment when the individual experienced the drive of the intrinsic motivator, and they’ve forgotten how it felt. Measuring intrinsic motivation based on real-time performance reveals exactly which types of recognition or intrinsic rewards drive desired results based on employees’ “in the moment,” authentic behavior.
- To track how engagement in one area influences performance in another. Let’s take sales for example. Using compensation incentives, measuring effectiveness only goes as far as answering the question, “Did a higher commission result in more sales?” But, there are so many confounding factors, not to mention other measures of performance. For example: does incentivizing sales training help to increase deal size? Does being recognized as a product expert or a leader in best-practices when it comes to delivering a client pitch result in faster deal close? What about customer-facing support portals—does a high seller’s reputation here correlate to higher conversion? These are all important metrics that when using pay-for-performance as the only motivator would remain completely undiscovered—and unrewarded.
- To identify effective ways to improve. When the carrot and stick approach is ineffective, most companies have no idea what to do next besides offer bigger carrots or sticks. Soon, the pressure to perform has the opposite effect, with employees feeling inadequate, beat down, unappreciated and miserable because their efforts and victories that don’t fit within the conventional motivation metrics go unnoticed and unrewarded. Teamwork, collaboration, mastery, problem-solving, and creativity—those “soft skills” that are really at the heart of employee performance—go unrecognized in the face of a focus on revenue and productivity. Measuring intrinsic motivation allows you to gain a fuller perspective into all of the areas employees are performing in—not just at the bottom line—to focus on incentivizing those areas and tying those behaviors to performance KPIs. Rather than concentrating on the end result, you can focus on the process and fix what’s broken before it impacts results.
Once you begin measuring these intrinsic factors, it becomes more feasible to build an effective long-term performance strategy based on these insights. Here’s how:
- Establish a baseline. Where do your employees, activities and efforts stand when it comes to motivation? Assess engagement levels, participation, interaction, etc. to determine where you are right now so that you will have a comparison to where you would like to be.
- Form a hypothesis based on what you believe may provide intrinsic motivators for your team based on the baseline measurement.
- Implement tactics designed to drive desired behaviors: a badge system for forum participation, peer recognition for completing training modules, reputation scoring, rewards for engagement on the collaboration platform—whatever your instincts and baseline suggest might be effective. Methodically test and motivate behaviors that support your hypothesis.
- As with any experiment, you will then measure, compare to baseline, adjust tactics and repeat. It becomes an iterative process that enables you to fine-tune your tactics based on empirical results—once you start measuring what matters.
The best part about this type of strategy is that you can measure further up the process chain to understand what works, what doesn’t and why before it impacts the end result (productivity, sales, revenue, etc.). You can gain visibility into what really drives your employees to perform before it’s too late, giving you ample time to adjust.
While certainly every company will have unique needs and goals, just as every employee has unique intrinsic motivators, with the right processes and electronic tools in place, you can systematically address intrinsic incentives at scale to motivate what really matters.