A recent email got my attention. It highlighted a blog post on the MIT Technology Review website about a video from RSA Animate (copied below) illustrating a lecture by Dan Pink (@danielpink on Twitter): "The Surprising Truth About What Motivates Us," based on his book of the same name.

What got my attention? We need to stop rewarding with a carrot and threatening with a stick. The video highlights multiple research findings that suggest knowledge workers are more motivated by autonomy, mastery and purpose than by financial reward. Pink suggests that financial incentives may actually have a detrimental impact on performance under certain circumstances.  (The research suggests money is a motivator for purely mechanical tasks but as soon as some level of cognitive processing is required to complete the task, money is secondary to other factors.)

I have to say this was a little hard to swallow at first. But then I almost missed a key point: this is only true when minimum financial rewards are met, i.e. when employees are paid a large enough base salary, financial incentives to deliver high performance may be detrimental when compared to other motivators such as the desire for: autonomy, mastery of skills, and a sense of purpose.

In his presentation at TED, Pink highlights examples from many firms leveraging autonomy, mastery and purpose to raise the bar on employee performance. This all seems to make sense and fit within well-known behavioral theory that goes back as far as Maslow's hierarchy of needs. As long as base salary levels are such that lower level security needs are met, other higher-order needs take over as motivators.

What wasn't clear from the video and Pink’s presentation was the impact on behavior of obscenely large financial rewards (think Wall St. bonuses). The video does highlight problems that occur when the profit motive is divorced from the sense of purpose. Nor is it clear if time has an impact on incentive reward schemes — for example, any incentive scheme typically needs to go through several review cycles before the employee behavior changes as intended.

What are the implications for the CIO? The CIO must decide the best ways to incent behaviors to achieve outcomes. Since the bulk of IT cost outside of the balance sheet is invested in human capital, making changes in IT incentives can have significant impact on the IT bottom line. This research would suggest CIOs should avoid expensive bonus schemes and instead incent higher performance by:

• Providing more autonomy. Empower employees to decide how to meet the objectives and goals of the organization; give them more autonomy to determine how to deliver results.
• Encourage mastery of skills. IT staff have often shown an inclination to learn beyond the requirements of their day job; structuring the role of staff to provide for continuous learning and elevation of skill levels acts as a motivator and has been shown to help retention.
• Provide a sense of purpose. Ideally your organization/company has a clear sense of purpose that is communicated to all employees. CIOs can also enhance this by delivering a clear sense of purpose for the IT group that supports the company's purpose.

What do you think? Are you motivated by the promise of higher rewards or do autonomy, mastery and purpose represent all that truly matters to you?

Beyond the lessons from the research, the animation in the video is great — I'm full of admiration for the talent to illustrate points as clearly as this.