For mechanical, repetitive tasks, higher pay can indeed up performance. But when the job at hand requires innovation or creativity, studies suggest that more money may actually diminish returns. There's even a term for when the promise of an incentive reduces your motivation to perform a task: the overjustification effect. Some scientists think that, when offered a reward, a person's focus might shift to the reward instead of the activity they once found pleasing, resulting in less intrinsic enjoyment and therefore lower performance.
More Pay Often Equals Worse Work
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Key Facts In This Video
One MIT study found that when assigning a task that involved cognitive skill, offering a larger reward led to poorer performance. 01:49
Science suggests that three factors lead to better performance and satisfaction: autonomy, mastery, and purpose. 05:05
It's advantageous for companies to connect their profit motive to a more transcendental "purpose motive." 08:44