When a task gets more complicated (which requires some conceptual and creative thinking), the magic on monetary reward based on performance only works half the way. After the worker gets enough money to satisfy their needs, giving them more money isn’t going to improve their performance much. If you are paid $300,000 per year, are you going to work twice as hard (or inspired to improve efficiency better) to earn another $150,000 worth of bonus? Since your basic and security needs are satisfied, you probably will be looking into esteem and self-actualization needs (Maslow’s hierarchy of needs), and money can’t buy these needs.
3 factors lead to better performance & personal satisfaction:
- Autonomy – The desire to be self directed (I know what’s best to do to make my own destiny). Rather than always telling the employees what to do, why not allow some levy for them to decide how to make the company or product better (example of Google’s 20% time)
- Mastery – The urge to get better at stuff (it’s fun and satisfying, and feel good for self esteem). Example? People using their free time working on open-source projects, and give it for free.
- Purpose – if the profit motive gets unmoored from the purpose motive, bad things happens. We all want to believe that we are working towards a greater good, and we are purpose maximiser (we care about purpose)