A study in MIT took a whole group of students and gave them a set of challenges such as memorizing digits, and solving puzzles. To incentivize their performance, they gave them 3 levels of awards. They rewarded the top performers and ignored the low performers. After the test was over, as long as the tasks involved used only mechanical skills, higher pay led to better performance. However, when there was cognitive skill involved, a larger reward led to a worse performance. Once someone get above rudimentary cognitive skills, then incentives don’t work.They replicated the same study in rural India. The people offered the highest reward had the worst performance. For simple tasks, they were outstanding but when the task got complicated, the incentive does not work. The best use of money is to pay people enough to take the issue of money off the table. Three factors lead to better performance: autonomy, mastery, and purpose. Autonomists are self-directed. Management is great if someone wants compliance but if he or she wants engagement, self direction is better. For example, Atlassian, an Austrian company, said that every Thursday their workers can work on whatever they want, but the results need to be shown to the company. That one particular day was when new ideas were developed by the workers! In addition, mastery is when we want to get better at stuff. For example, some people play piano over the weekend because it is fun and satisfying, but they do it for money. When the profit motives gets unmoored from the purpose motive, then bad things happen. People don’t do great things and there’s a decrease in talent. If we follow science and understand how the human mind works, then we can make the world a better place.

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