When Incentives Are Too Enticing

Can incentive pay overstimulate employees to the point they do poor work?

Management research about incentive pay often focuses on whether or not the tactic works to increase productivity.

But what if the promise of a bonus or some other reward works too well?

New neuroscience research from a team of American and European researchers shows that the excitement of a reward might excite people to the point they are unable to adequately complete the task at hand. The study was detailed recently on the Association for Psychological Science's Minds for Business blog.

Brain Teaser

Participants in the study were monitored for brain imaging to gauge their dopamine levels--the chemical in the brain largely responsible for reward seeking behavior. They were then faced with a brain teaser and were promised either a high or low monetary reward for correct answers on that task.

A screen showed participants arrows on the screen with the words "LEFT" or "RIGHT" inside it. However, the words did not necessarily correlate to the direction the arrows pointed. Participants were asked to press a button corresponding to the words in the arrow and not the direction of it.

All participants fared pretty well in correctly analyzing the arrows that matched the words within them.

But participants with high dopamine levels proved less capable of accomplishing the task when they had been promised the larger reward compared to those who could achieve the lower reward. In other words, as the Minds for Business blog puts it, they "were so distracted by the potential reward that they had trouble concentrating on the task."

Yeah, But...

This is the kind of study that requires a caveat.

First, this was an academic study that wasn't conducted in a business atmosphere. While it might say some interesting things about human nature, it doesn't necessarily have immediate business application.

That's especially so because it seems that only those with already-high dopamine levels were the ones for whom the prospect of a higher reward negatively impacted their work. It's unlikely you're testing candidates' dopamine levels very regularly.

And even if it was in a business atmosphere, and even if you knew all your employees had high dopamine levels, the task itself was still the sort of deadline-driven work that required a very specific solution. So the findings might not be applicable to more collaborative, open-ended, left-brain sort of work. 

Having acknowledged all that, the study still makes for an interesting addition to incentive research, showing the possibility that the prospect of a big reward could at times fail to garner the desired outcome.

Last updated: Feb 26, 2014

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