What Really Makes People Work Hard?

have you ever wondered folks and Julie for that matter what incentives make employees work a little bit harder is it social rewards to drive people or perhaps financial ones like your yearly holiday bonus our next guest has it all figured out dan Ariely is professor of psychology and behavioral economics at Duke University and he's also author of the new book irrationally yours and and Robertson Abbey video is still here with us Dan great to have you back on market makers hey nice to see ya so what works social rewards a cold hard cash okay so let me describe to you the experiment let's see if you can predict okay so another quiz I feel it's definitely a quiz earlier this morning miserably okay so this we did this experiment at Intel chip manufacture and this is a place where people come for four days they work for four days very long shift twelve hours days so they have four days on and then four days off four days or a job function they make chips got it and what's nice about making chips is we can measure how many chips they make right if I try to measure your productivity a little hard to figure out there but you know people who make chips we have some output measure now on the first day of the first shift Intel gives them a bonus they say if you perform at this level you make let's say 1,300 chips we'll give you $25 you don't make it zero so it's a threshold and then no bonus on the second day no bones on the third no boss on the four four days off back to the bonus so that's what they do we said let's do a control condition let's have another condition in which we give people nothing right just compare the cart with nothing nothing then we said another condition how about if we give people Pizza Pizza Pizza like a social thing right well yeah okay it turns out it's very hard for the HR department of Intel to send people Pizza complexities beyond me but they agreed to do a voucher for pizza so it's not exactly the same but you know it's said you're taking out the whole community environment over working along the edge own it together it's fun and we did one last thing which is to send people a compliment so we have four groups one group is getting a compliment they come on that day and they say if you perform at this level you'll get a nice text message from the boss one group is saying if you perform at this level get a voucher for pizza one group if you perform at this level get $25 and one group gets nothing which one of those four do you think before yes let's guess compliment money voucher nothing compliment compliment I'm gonna say compliment okay definitely not the voucher very good so you all know of course it's trick question because you wouldn't invite me otherwise but here's what happened on that first day of the first shift all methods money Pizza compliment worked better than nothing and they all were identically better but here's what happened what happened on the second day remember on the next day there was no bonus involved mm-hmm but now things happened why because the people who got money on the first day worked harder when the second day they worked 15% worse than a control condition whoa it's as if they said yesterday I worked hard you gave me money today there's no money I'm not so interested right so they went up they went down and then they slowly went up back to the control condition so in total by giving people this money until lost about 5% of productivity and by the way that's the thing they were doing generally so we went to them we talked to the managers and we said look your intuition was so wrong right you created this bonus because you thought it would help clearly not only didn't help it hurt your performance we said let us maybe even change the compensation for the top management maybe your intuitions about that is wrong as well but you know they were not interested in in those experiments by the way wait what happened to the other rewards so the text the text message on walls went up in the same way and went down slowly but never backfired and pizza was somewhere in the middle now and you can see how if pizza was more in the social realm like more like real pizza it will probably look more like text and if it was more transactional would it look like the money and this is the thing you know there are so many jobs in which you rely on people goodness to perform at a higher level we can't create a specific contract here is how much exact you getting there is a lot of discretionary effort and the question is what gets people to want to exert more discussion effort and look we have to pay people and we should pay people well but what gets people to do more discretionary effort is often not a little bit more money but instead it's something that they care about but isn't this the problem with the financial industry before the crisis when it was all about getting paid the most amount of money possible then the crisis hits regulators say you can't pay people anymore they realize how much they hate working at banks and how poorly they're treated so so that's the question of you know what was money is a function of before the financial crisis and I don't think money was just money it was keeping score it was feeling appreciated I spoke with the head of a big bank and I said you know what happens when you give somebody a bonus of more than a million dollars he said we give them the check and we don't even smile at them I said you know I actually own some shares in your bank I think you're not doing the right thing I want you to give them a hug if you can give buy them beer and give them and get them more motivated yeah I was enticing you doing this yeah people like and and he said no no we would never give somebody a hug or buy them beer I said look this is this is crazy right but here's the thing money is both money it can be a substitute for lots of other things and I think in banking it's been substitute for lots of other things but we're not doing it the right way Andrew does this square with the research you've done absolutely video absolutely reason drives to conclusion emotion drives behavior if you can do things that will stimulate the production of either dopamine or or oxytocin you create a very is that what we're talking about dance what creating an emotional people hug so so you know oxytocin is is a very interesting neurotransmitter that gets us to basically have higher social coordination and care more about other people and now ask yourself how much of your job or anybody's job is the thought that we have is end of your bonus versus the thought of the year is what do other people expect from you but what are the people around me how do I facilitate them and and then this idea of complete and incomplete contracts right so if if you really rely on the goodness of my heart what would get me to be a bit more interested is it is it something that is delayed no it is in close in close proximity need something about the people people around me there's lots of wonderful ways to get people to care more money is one of them but money is often not the most optimal one and it's kind of a shame because if you say let's structure the enjoyment of people with money and other types of incentives everybody could benefit right you could get people to produce more and be happier at the same time

Channel: Bloomberg Quicktake

Views: 175,136

Rating: 4.843349 out of 5

Keywords: Bloomberg, Incentive (Literature Subject), work, office, Behavior (Quotation Subject), Behavioral Economics (Field Of Study), science

Id: yu1DhC36qyw

Length: 7min 6sec (426 seconds)

Published: Mon May 18 2015

Reddit Comments

[u/metalliska]

Are there any other academics like this? It seems to be mostly an Airely-based message.