Never take a job with incentives

by

Business mouse and cheese_2

How pay for performance makes you dumber

As you know, it is fashionable to offer pay for performance incentives to employees. You know, you do X and we will give you $Y at the end of the year. Incentive plans like this are especially common for executives and sales people. Often these incentive plans cascade down, layer after layer, from CEO to worker bee, under the theory that engineering incentives in this way will improve the performance of the company as a whole.

For a moment, hold aside the question of whether these incentives will improve the performance of the company; let’s ask a different question: what will these incentives do to you? To your mind? Your thinking? Your performance? Will you be better because of them?

You may be familiar with a creative problem solving experiment published in 1945 called Duncker’s candle problem. It goes like this: a group is handed a candle, a box of tacks, and a book of matches. They are instructed to affix the candle to the wall and light it. Eventually, after stumbling around for a while, they will figure out that they need to take the tacks out of the box and then use the box as a shelf to stand the candle on. Problem solved.

What you may not know is that there are two different ways of performing this experiment. Imagine this variation: in Group 1 the setup is done as I just described: the tacks start in their box. Group 2 is given the same problem, but in this case the tacks start outside of their box. Obviously, for the second group it is much easier to solve the problem. Removing the tacks from the box makes it much less complicated because it helps people overcome what is known as functional fixedness a cognitive bias that limits a person to using an object only in the way they are used to it traditionally being used. When the tacks are in the box, it is harder for participants to see that box as having any other functional purpose than for just holding the tacks.

But, what’s interesting is what happened when researchers applied incentives for performance. Group 2, the group that was completing the simple problem performed the task even faster than before incentives were applied. But, Group 1 that had the more complicated version of the problem performed worse when incentives were applied. That’s right they performed worse.

This study and numerous studies like it have shown over and over again that financial incentives hinder our brain’s ability to solve complex problems, especially if they require creative thinking.

Think about it this way. When someone offers you an incentive to achieve a particular goal, they are simultaneously and unintentionally making it harder for you to achieve that particular goal. It’s perverse. But, true. You will be worse at your job…and you will be especially worse at the parts that matter most.

So, don’t take a job if they offer you pay for performance incentives if that job requires creating thinking or complex problem solving—your mind and your performance are too valuable of things to waste.

READ MORE

The Magic of Mortals

The Magic of Mortals

Daily we wake up to new developments in automation, Artificial Intelligence (AI), and Machine Learning (ML). Across sectors and industries, automated solutions prove highly successful in surpassing the capacity of the human brain for certain tasks, improving...

read more
Leveling Up: How to Hone Your Skills at Home

Leveling Up: How to Hone Your Skills at Home

Leaders have been trying to crack the code on talent development for years. Recent studies have shown, however, that strength-focused leadership [read: intentionally elevating the qualities that already come naturally to us] is the clear winner for developing talent...

read more
Fake Case Study: Jack of all trades vs. Master of One

Fake Case Study: Jack of all trades vs. Master of One

  Listen to any earnings call or executive presentation and you will likely hear the terms “top line” and “bottom line.” These are words used to describe a business’s performance. According to Investopedia, the words are defined as follows: Top line refers to the...

read more
Your Personality Is Showing

Your Personality Is Showing

There I was, minding my own business one evening, digging into my organization's SEO performance (as one does), when I came across something interesting. Search terms related to "MBTI" — or the Myers-Briggs Type Indicator, developed by Katherine Cook Briggs and Isabel...

read more
Lessons From a Change Manager Who Hates Change

Lessons From a Change Manager Who Hates Change

Hello. My name is Monique, and I’m a change manager who hates change.   After years of receiving “consulting therapy” from various mentors, I am now able to say these words out loud and proudly. But for a long time, it felt more like an admission of guilt. I mean, who...

read more
Creativity as a Cure

Creativity as a Cure

The topic of creative solutioning has been front and center these days as we talk more and more about organizational adaptability in the face of dynamic and uncertain times. For example, I recently read about a project that got me thinking about specific priorities...

read more
Thought Ensemble, a Pariveda Company — Why Now?

Thought Ensemble, a Pariveda Company — Why Now?

Big news over here as we close out the year - we have been acquired by Pariveda, a 750-person consulting firm in 12 markets across North America! We are now “Thought Ensemble, a Pariveda Company” and I’ll be serving as the Managing Vice President continuing to lead...

read more
Thought Ensemble Joins Pariveda Solutions!

Thought Ensemble Joins Pariveda Solutions!

Dallas, December 9, 2021 /PRNewswire/ -- Pariveda, a leader specializing in solving complex technology and business problems, announces the acquisition of Thought Ensemble. With the addition of Thought Ensemble, Pariveda now provides holistic business strategy,...

read more
Thoughts on Colorado’s Equal Pay for Equal Work Act

Thoughts on Colorado’s Equal Pay for Equal Work Act

It was about a year ago that we first started hearing about Colorado’s Equal Pay for Equal Work Act (SB19-085) and I knew it was going to be national news. We’d just gotten past the “Rocky Mountain High” jokes, and our lovely state was trying to break new ground...

read more