Unless your employees are the Teenage Mutant Ninja Turtles, you would expect them to be more motivated by money than pizza. However, an experiment carried out by psychology professor Dan Ariely of Duke University found that people actually prefer pizza and praise over money.
As part of the study, workers at a semiconductor factory in Israel were split into four groups and were offered a variety of rewards for assembling a number of chips each day. One group was incentivised with the promise of a bonus of around $30; another with the prospect of praise, a third group was offered a voucher for pizza and the fourth group received no incentive at all.
Towards the beginning of the week, free pizza proved the biggest motivator, with a 6.7% increase in productivity over the control group, with praise from the boss coming a close second (with a 6.6% increase). The group offered a cash incentive came below both of these with a 4.9% increase in productivity.
At the end of the week’s study, praise overtook pizza as a motivator, but shockingly the control group was third and the money group was last. Interestingly Airely believes that if the study had been conducted the way he’d wanted, pizza would have remained top. He wanted pizza to be delivered to the home of any employee who hit their target: “This way… we not only would give them a gift, but we would also make them heroes in the eyes of their families, he writes”.
This means that in the case of the study, providing the offer of a bonus actually appeared to reduce productivity. Interestingly, research carried out by the London School of Economics in 2011 also concluded that the provision of performance related pay could result In a net reduction of motivation across a team or organisation.
Clearly this shows that in order to make work place incentives effective, they need to be carefully designed; it cannot simply be assumed that money motivates best, indeed a simple “well done” could be more appreciated.
From original Melissa Dahl’s New York Magazine article http://nymag.com/thecut/2016/08/how-to-motivate-employees-give-them-compliments-and-pizza.html