Four Ways to Motivate Your Employees, From One of the World’s Most Prominent Behavioral Economists

Work should be meaningful.

What makes employees care about their work?

Money is what gets workers in the door, but it doesn’t make them go the extra mile. To better understand what drives us, Dan Ariely, a professor of behavioral economics and psychology at Duke University, designed a series of experiments aimed at unlocking the roots of intrinsic motivation.

Ariely, who has written best-selling books about irrationality and dishonesty (one of which led to a documentary), condensed his findings into a book, Payoff: The Hidden Logic That Shapes our Motivations, and discussed them in an interview with Quartz.

Make work rewarding

In one of his experiments, Ariely asked subjects to build Lego toys, called Bionicles, and he paid them $2 for the first one they built, and slightly less for each subsequent toy. In one group, after receiving the completed Bionicle, Ariely’s researchers would set it aside. With another group, the researchers began dismantling the toys as soon as they received them. In the first group, the subjects made an average 11 Bionicles before giving up. The second group—whom Ariely compares to Sisyphus, the figure of Greek myth eternally rolling a rock up a hill— walked away after making just seven. Other, similar experiments reinforced the message: “People want to feel like they’re contributing,” Ariely told Quartz. “They want a sense of purpose, a sense that work itself has an impact.”

To do that, Ariel recommends employers show their workers how their products or services help people. That’s easier in some fields, like making drugs that fight cancer, and than in others, like making soft drinks. But even then, employers can “emphasize the joy, the sweetness, even the sound of a can opening.”

Companies should give workers insight into its operations, and let them participate, through town hall meetings and other events. Offering them equity—such as yogurt maker Chobani did when it promised employees shares worth 10% of the proceeds from a future sale or IPO—can help invest employees in the corporation’s success. “Giving them a share of the company, even if it’s small, gives them a sense of ownership,” Ariely said.

Trust your employees

Nothing beats down motivation like bureaucracy and rules. Organizations have regulations and procedures to standardize operations, but as they reduce employee autonomy, they reinforce that idea the workers are replaceable cogs in a machine. At worst, an over-reliance on rules and procedures can have a negative affect and on the organization, as workers find ways to game the system. “Every time you try to create rules, there’s going to be a gap between the rules, and the meaning of those rules,” Ariely said. It was through that gap that Wells Fargo‘s employees realized they could meet their sales goals by opening fake accounts in their customers’ names.

Many rules are in place because companies have zero tolerance for employee misbehavior, so all employees—including the ethical majority—labor under the same morale-sapping shackles. By loosening the regulations, corporations may see some employees take advantage, but more will use their new-found freedom to serve the company’s goals in more creative ways. “When you give people trust, people can flourish,” Ariely said.

He cited a large hotel company he worked with that relied on telemarketing. Its employees were instructed to read from a script to sell products, even if they knew that the scripts weren’t appropriate for customers. When employees were allowed to deviate from the script, they had happier customers and increased sales, he said. “The lack of tolerance on the downside limits the potential on the upside.”

Challenge them

The more effort we put into our work, the more pride we take in it. In another experiment, Ariely asked subjects to build origami cranes and frogs by folding pieces of paper. When he asked the builders what they would pay for their creations, they offered on average five times more than other potential buyers. And when he deliberately made their tasks harder by omitting key details from the origami instructions, the price offered by objective buyers went down, but the value their builders placed on them soared.

In another example, Ariely tells the story of P. Duff & Sons cake mixes, which were introduced in the 1940s. The initial product required home chefs to add only water to produce a cake, but they didn’t sell well. It was only after the mixes were made slightly more complicated, and required the introduction of milk and eggs, that they began to sell. It was the addition of a bit of work that gave chefs a sense of accomplishment, and made the cakes worth baking.

Workers derive more meaning from work that is difficult than from jobs that are easy or rote, Ariely said. Employers can oblige them by giving them new tasks or putting them into new roles that stretch them.

Rethink bonuses

Cash bonuses are essentially bribes to get people to do their job, Ariely says. “What it says is, ‘you know the right thing to do, but you’re not interested’.”

Ariely and few other economists enlisted Intel to test different ways to motivate employees. They wondered what would make semiconductor factory workers more productive: a cash bonus, a voucher for a pizza, a note of thanks from their boss, or no reward at all. Employees were given production quotas at the beginning of the day, and told they would be given the bonus if they met their goal.

Not only did cash fare the worst of the three rewards, but it had the most short-lived effect. The day after bonuses were handed out, the workers who received cash were 13% less productive then the employees who got nothing at all. The performance of the employees who received notes or pizzas stayed relatively high for a few days after their reward before gradually returning to their baseline.

Cash had less impact, Ariely believes, because we think and act on longer time scales, and one-day motivations are less important than more enduring ones, such as finding meaning in work and feeling valued by your employer. Rather than paying cash bonuses, he recommends companies think about different rewards that show employers are interested in their workers long-term health and growth, such as contributing to their children’s college education funds. While Ariely concedes it may seem paternalistic, it’s a recognition that life is difficult and that most people don’t save enough. A company that explained it’s looking out for families of its employees could be paid back with greater loyalty and effort.

Not every technique will unlock every employee’s fullest potential. But a companies that experiment will have more success than the ones that never try.