Carrots Dressed as Sticks

A few years back The Economist published an interesting article entitled: “Carrots Dressed as Sticks.” This article still provides an important lesson for today’s workplace.

Tanjim Hossain of the University of Toronto and John List of the University of Chicago conducted a study that focused on the hypothesis that the value people attach to objects is affected by what they already have; people seem to hate losing something already in their possession more than gaining something equivalent that is not currently theirs.

The study was conducted in a Chinese electronics factory. The managers in this factory were interested in exploring ways to make their bonus plans more effective. Instead of focusing on the amounts of the bonuses, Hossain and List instead decided to concentrate on the wording of the letter informing workers of the details of the bonus plan.

One group of workers was told at the beginning of the week that they would receive a bonus of 80 yuan ($12) at the end of the week if they met a certain production target. A second group was told they had “provisionally” been awarded the same bonus, but they would “lose” it if they did not reach their target.

The different ways of describing the bonus actually amount to the same thing. However, the hypothesis of the study was that the second way of describing the bonus would work better. The workers would think of the provisional bonus as “already theirs,” and work harder to prevent it from being taken away. This is exactly what Hossain and List found. The fear of loss was a better motivator than the prospect of gain.

Would we find the same results everywhere? Possibly, but probably not. What motivates employees is often surprising and unpredictable. There is no one answer. Every organization is different, every work situation is different, and every individual is different.

Employers would do well to remember this. It is easy to mistakenly assume that we know what the key motivators are for our staff. The best organizations don’t assume—they listen. They take the time to understand their workforce. By doing this, they are in a better position to understand what their employees truly value—and what makes them want to stay.

What motivates the people that work in your organization? There won’t be one answer. That’s the challenge—and the beauty—of human motivation.

Thanks to John White for this week’s post. John is the principal of JD White & Associates an HR consulting firm that focuses on Compensation and Benefits, HR Effectiveness and Compliance, Professional Development and Communication.

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