In America we have a motivation problem : money. I'm not a communist. I love capitalism (I even love money), but here's a simple fact we've known since 1962: using money as a motivator makes us less capable at problem-solving. It actually makes us dumber.

When your employees have to do something straightforward, like pressing a button or manning one stage in an assembly line, financial incentives work. It's a small effect, but they do work. Simple jobs are like the simple candle problem.

However, if your people must do something that requires any creative or critical thinking, financial incentives hurt. The In-Box Candle Problem is the stereotypical problem that requires you to think "Out of the Box," (you knew that was coming, didn't you?). Whenever people must think out of the box, offering them a monetary carrot will keep them in that box.

A monetary reward will help your employees focus. That's the point. ^When you're focused you are less able to think laterally. You become dumber*. This is not the kind of thing we want if we expect to solve the problems that face us in the 21st century.

Is your job like that of a button pusher? or do you have to think creatively? What about a CEO? The results above apply more to a CEO than almost anybody, yet CEOs receive greater financial incentives than anyone. This practice is self-destructive. Now I understand why the CEO of Company X killed his golden goose. I understand why he decimated R&D. I understand why he upped the number of spurious lawsuits against competitors instead of investing in long term growth. He was incentivized. He was focused. The stock price was the most important metric of judgment. The same is true for many other companies.

http://blogs.nature.com/a_mad_hemorrhage/2012/04/02/ceos-and-the-candle-problem

CEOs and the Candle Problem – A Mad Hemorrhage Blog | Nature Publishing Group

Tweet me-close.jpg. In America we have a motivation problem : money. I'm not a communist. I love capitalism (I even love money), but here's a simple fact we've known since 1962: using mone…