For many years I believed that a "one size fits all" monetary reward system that motivates both "hourly" and "salaried" employees didn't seem right. Yes, most people appreciate getting a big bonus for performance in achieving certain goals no matter what kind of work you do, clerical or not. It's also somewhat intuitive that for certain job functions, namely hourly work, increase in productivity is naturally impacted by a monetary reward system. On the other hand, in all these years, I never saw an "A" player that was driven by the promise or possibility of financial reward. Once an "A" player is paid fairly the answer to the question "What gets you up in the morning?" is inevitably anything but money. So, I started a search for a quantitative proof of what I always felt to be right. The prevalent reward system most company have used for decades to motivate and engage "hourly" employees did not work for "salaried" employees.
Enter the Candle Problem
The "Candle Problem" is a test of creative problem solving developed by psychologist Karl Duncker in 1945. The test challenges "functional fixedness", a cognitive bias that makes it difficult to use familiar objects in abnormal ways. Subjects are given a candle, a box of thumbtacks, and a box of matches, and asked to fix the lit candle to the wall so that it will not drip wax onto the table below.
Duncker observed that subjects tried to attach the candle directly to the wall with the tacks, or to glue it to the wall by melting it. Few thought of using the box as a candle-holder. Why? Simply because the box was presented as a receptacle for the thumbtacks. The subjects were too fixated on the box's function as presented in the problem.
However, when presented with an empty box, subjects were twice as more likely to solve the problem. The empty box was no longer seen as a receptacle for the tacks which enabled people's ability to solve the problem.
In trying to understand the effects of incentives in the desired outcome, the following variant of the test was carried out. Subjects were divided into two groups. Group 1 was offered $5 for being in the top 25% fastest to solve the problem and $20 if they are the fastest. Group 2 was not offered any incentives and only asked to solve the problem within 15 min. For the "tacks outside the box" version of the experiment, the results were as expected and Group 1 performed statistically faster than Group 2. The surprise was that Group 1 did not do better than Group 2 in the "tacks inside the box" version, which required creativity and out-of-the-box thinking. A number of variations of the test have been run over the years, some even indicating that Group 2 does better than Group 1 for the "tacks outside the box".
The takeaways from these experiments:
- Reward of task-oriented, clerical (or hourly) work, does have a significant positive impact on productivity
- Reward of open-ended (or salaried) work, has neutral impact on productivity (neither negative nor positive)
Conclusion
Despite 70+ years of scientific evidence that indicates we need to rethink how to motivate employees in the 21st century economy, most companies continue to practice the pre-established "Carrot-and-Stick" reward system at all levels of the organization. Leaders whose employees fall in the "tacks-inside-the-box" category must change the way they think about employee motivation if they want to remain relevant.
So, what are you doing to motivate salaried employees? Is your company using appropriate and differentiated incentives for hourly and salary employees? Which ones?
