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Are your incentives irrational?

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in Leaders & Managers

Dan Ariely knows a thing or two about being irrational. The Duke University professor has already written two books on our often-irrational process of making decisions.

When asked, “What kinds of things do companies do that are irrational?” he says, “It puzzles me how little companies understand about how incentives really work.”

Ariely says he has asked many companies, “Why don’t you survey employees during bonus months to see how it affects their productivity and happiness?”

He explains to leaders that the opportunity is to better understand what motivates employees. And 100% of the time, he says, company leaders reject the idea.

Getting people to care about their work, become more engaged and productive, and feel happier on the job is a complex challenge that cannot be answered with a flat figure.

“More money can be part of the equation, but it’s also a question of how you give that money,” he says.

“Do you give it as bonus, do you give it as a fixed salary, do you give it as part of the benefits? Maybe you give benefits for the gym. Do you send people on vacation to the Bahamas?”

Bottom line: Ask, and you may find other ways to use money as a motivator that are less efficient, but that “get people to be more motivated, to care more and to actually become more productive,” Ariely says.

— Adapted from “Focus Groups Aren’t as Useful as Companies Think,” David Hirschman, Big Think.

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