Work performance incentive beyond ‘carrots and sticks’

Work performance incentive beyond ‘carrots and sticks’

ISE Magazine January 2020 Volume: 52 Number: 1

By Adam Cywar


This is the second of three articles that addresses the age-old question of what drives the performance levels manifest in completing work.

This article discusses the inputs that led up to what I consider to be the most significant factor affecting performance levels, shaped by several elements that are reviewed here.

The Hawthorne experiments

One of the most revealing insights to performance factors came out of the Western Electric studies from 1927 to 1932 at its Hawthorne plant in Chicago. Western Electric Co. was an American electrical engineering and manufacturing company and supplier to AT&T from 1881 to 1995. It was the scene of a number of technological innovations and also some seminal developments in industrial management.

Harvard Business School professor Elton Mayo was hired to examine productivity and work conditions in studies con-ducted from 1927 to 1932. The studies grew out of preliminary experiments at the plant from 1924 to 1927 on the effect of light on productivity. Those experiments showed no clear connection between productivity and the amount of illumination but researchers began to wonder what kind of changes would influence output.

Specifically, Mayo wanted to find out what effect fatigue and monotony had on job productivity and how to control them through variables such as rest breaks, work hours, temperature and humidity. In the process, he stumbled upon a principle of human motivation that would help revolutionize the theory and practice of management.

Mayo took six women from the assembly line, segregated them from the rest of the factory and put them under the eye of a supervisor, who was more a friendly observer than disciplinarian. Mayo made frequent changes in their working conditions, always discussing and explaining the changes in advance.

He changed their hours in the workweek and in the work-day, the number of rest breaks and time of their lunch hour. Occasionally, he would return the women to their original, harder working conditions.

The investigators selected two women for their second series of experiments and asked them to choose another four, making a small group of six. The group was employed in assembling telephone relays, a small but intricate mechanism composed of about 40 separate parts that had to be assembled by the women seated at a lone bench and dropped into a chute when completed.

The relays were counted mechanically as they slipped down the chute. It was intended that the basic rate of production should be noted at the start, and that subsequently changes would be introduced, the effectiveness of which would be measured by increased or decreased production of the relays.

Throughout the series of experiments, an observer sat with the women in the workshop noting all that went on, keeping them informed about the experiment, asking for advice or in-formation and listening to their complaints.

The experiment began by introducing various changes, each of which was continued for a test period of four to 12 weeks. The results of these changes are as follows:

  • Under normal conditions with a 48-hour week, including Saturdays and no rest pauses, the women produced 2,400 relays a week each.
  • They were then put on piece work for eight weeks and out-put went up.
  • Two five-minute rest pauses, morning and afternoon, were introduced for a period of five weeks; output went up once more.
  • The rest pauses were lengthened to 10 minutes each; output went up sharply.
  • Six five-minute pauses were introduced, and the women complained that their work rhythm was broken by the frequent pauses; output fell slightly.
  • They returned to the two rest pauses, the first with a hot meal supplied by the company free of charge; output went up.
  • The women were dismissed at 4.30 p.m. instead of 5 p.m.; output went up. They were dismissed at 4 p.m.; output remained the same.
  • Finally, all the improvements were taken away, and the women went back to the physical conditions of the beginning of the experiment: working Saturday, a 48-hour work week, no rest pauses, no piece work and no free meal. This state of affairs lasted for a period of 12 weeks. Output was the highest ever recorded, averaging 3,000 relays a week.

Findings from the Hawthorne experiments

What happened was that six individuals became a team and the team gave itself wholeheartedly and spontaneously to co-operation in the experiment. They felt themselves to be participating freely and without afterthought and were happy in the knowledge they were working without coercion from above or limitation from below.

They were themselves satisfied at the consequence for they felt that they were working under less pressure than ever before. In fact, regular medical checks showed no signs of cumulative fatigue and absences from work declined by 80%.

It was noted, too, that each woman had her own technique of putting the component parts of the relay together. Some-times one varied this technique in order to avoid monotony and it was found that the more intelligent the worker, the greater was the number of variations, similar to McClelland’s research findings into achievement of motivated people.

The experimental group had considerable freedom of movement. They were not pushed around or bossed by anyone. Under these conditions, they developed an increased sense of responsibility and instead of discipline from higher authority being imposed, it came from within the group itself.

To his amazement, Mayo discovered a general upward trend in production, completely independent of any of the changes he made. His findings didn’t mesh with the prevalent theory of the worker as being motivated solely by self-interest. It didn’t make sense that productivity would continue to rise gradually when he cut out breaks and returned the women to longer working hours.

Mayo began to look around and realized that the women, in exercising freedom they didn’t have on the factory floor, had formed a social atmosphere that also included the observer who tracked their productivity. They talked, they joked. They began to meet socially outside of work.

Mayo had discovered a fundamental concept that seems obvious today: Workplaces are social environments and, within them, people are motivated by much more than economic self-interest. He concluded that all aspects of that industrial environment carried social value.

When the women were singled out from the rest of the factory workers, it raised their self-esteem. When they were allowed to have a friendly relationship with their supervisor, they felt happier at work. When he discussed changes in advance with them, they felt they were part of the team.

He had secured their cooperation and loyalty, which explained why productivity rose even when he took away their rest breaks.

The power of the social setting and peer group dynamics became even more obvious to Mayo in a later part of the Hawthorne studies, when he saw the flip side of his original experiments. A group of 14 men who participated in a similar study restricted production because they were distrustful of the goals of the project.

The portion of the Hawthorne studies that dwelt on the positive effects of benign supervision and concern for workers that made them feel like part of a team became known as the Hawthorne Effect. The studies themselves spawned the hu-man relations school of management that is constantly being recycled in new forms today; witness quality circles, participatory management, team building, et al.

Incidentally, the Hawthorne Works, the place where history was made, is history now itself. Western Electric closed it in 1983.

Pink’s examples  in behavioral science

A TED Talk presentation by Daniel Pink in 2009 ties very closely to the findings described in the Hawthorne experiments. He uses several examples of problem-solving to discuss motivation and behavioral science.

Pink began with a problem to solve, one created in 1945 by psychologist Karl Duncker as an experiment in behavioral science. It places the subject in a room with a candle, a box of thumbtacks and some matches. The task is to attach the candle to the wall so the wax doesn’t drip onto the table.

Tacking the candle to the wall doesn’t work, nor does melting the candle to attach it to the wall. The solution: Attach the box filled with tacks to the wall as a platform for the candle to catch the dripping wax.

“Eventually, after five or 10 minutes, most people figure out the solution,” Pink said. “The key is to overcome what’s called functional fixedness.

”He cited another experiment by a scientist named Sam Glucksberg that shows the power of incentives. Glucksberg gathered participants and offered rewards based on how quickly they solved the candle problem. Those in the top 25% would receive $5; the fastest overall would get $20.Yet despite the incentive, it took the group 3½ minutes longer on average. “Now this makes no sense, right?” Pink said. “I mean, I’m an American. I believe in free markets. That’s not how it’s sup-posed to work, right? If you want people to perform better, you reward them, right? Bonuses, commissions, their own reality show. Incentivize them. That’s how business works. But that’s not happening here. You’ve got an incentive designed to sharpen thinking and accelerate creativity, and it does just the opposite. It dulls thinking and blocks creativity.

“What’s alarming here is that our business operating system – the set of assumptions and protocols beneath our businesses, how we motivate people, how we apply our human resources – is built entirely around these extrinsic motivators, around carrots and sticks. That’s actually fine for many kinds of 20th century tasks. But for 21st century tasks, the mechanistic, reward-and-punishment approach often doesn’t work, and often does harm.

”Glucksberg then altered the experiment by offering the same incentives but taking the tacks out of the box. In that instance, the incentivized group was able to perform faster.

“Rewards, by their very nature, narrow our focus; concentrate the mind; that’s why they work in so many cases,” Pink said. “And so, for tasks like this, a narrow focus, where you just see the goal right there, zoom straight ahead to it, they work really well. But for the real candle problem, you don’t want to be looking like this. The solution is not over here. The solution is on the periphery. You want to be looking around. That reward actually narrows our focus and restricts our possibility.”

The effect of rewards  on performance

In another case cited by Pink, economist Dan Ariely and three colleagues conducted a study with some MIT students who were given games that involved creativity, motor skills and concentration. They were offered three rewards levels for performance: small, medium and large. For tasks that required only mechanical skills, the rewards led to better performance. But in those that called for cognitive skills, a larger reward led to poorer performance. The same test was conducted in Madurai, India, to measure cultural bias, but with the same results: Those offered low and medium levels of rewards performed about the same, but those offered the highest rewards did worse in eight of nine tasks.

Pink cited similar results from a London School of Economics study that showed financial incentives can have a negative effect on performance.

“The solution is not to do more of the wrong things, to entice people with a sweeter carrot, or threaten them with a sharper stick,” he said. “We need a whole new approach.” “To my mind, that new operating system for our businesses revolves around three elements: autonomy, mastery and purpose. … These are the building blocks of an entirely new operating system for our businesses. Management is great. Traditional notions of management are great, if you want compliance. But if you want engagement, self-direction works better.

”To demonstrate such autonomy, Pink cited an example of the Australian software company Atlassian that would give its engineers 24 hours to work on any project they chose outside of their regular jobs, then present it to their teammates. That concept, which it called “20 Percent Time,” was adopted by Google. And perhaps the most radical example was Results Only Work Environment, or ROWE, created by two U.S. consultants and adopted by several North American companies. In ROWE, workers don’t have set schedules or have to be in the office for a certain period; they just have work that must be completed in any way they choose.

“What happens? Almost across the board, productivity goes up, worker engagement goes up, worker satisfaction goes up, turnover goes down.” Pink said. “Autonomy, mastery and purpose, these are the building blocks of a new way of doing things. Now some of you might look at this and say, ‘Hmm, that sounds nice, but it’s Utopian.’ And I say, ‘Nope. I have proof.’” He also cited the Wikipedia model of creating an encyclopedia in which contributors are not paid, just “do it because you like to do it.”

“This is the titanic battle between these two approaches,” he said. “Intrinsic motivators versus extrinsic motivators. … There is a mismatch between what science knows and what business does. … The science confirms what we know in our hearts. So if we repair this mismatch between what science knows and what business does, if we bring our motivation, notions of motivation into the 21st century, if we get past this lazy, dangerous ideology of carrots and sticks, we can strengthen our businesses, we can solve a lot of those candle problems, and maybe, maybe, maybe we can change the world.”

The final article in this three-part series will take the thinking of Pink and the Hawthorne experiments forward to the formation of the IRA Index and its potential uses to measure and track performance factors, plus some additional helpful hints.