The other day I was asked to speak for a company that had a limited amount of money and could pay me only 15% of my speaking fee.
Today I was asked to speak at a company in exchange for my receiving bicycle in lieu of cash (as you may guess, they manufacture bicycles). The value of the bicycle is less than the cash the other company offered me.
Which gig, if any, did I accept? What do you think?
Interestingly, I immediately turned down the cash offer yet accepted the barter deal.
Does this mean I am crazy?
No, actually, it means I am human.
In a nutshell, when a dollar value is assigned to a task, people weigh the effort against the financial return. But if no dollar amount is specified, we evaluate it differently.
- If I asked you to do me a favor, you might be inclined to do it simply to help me out.
- If I offered you a gift (e.g., a nice dinner) in exchange for your help, the gift may not weight heavily in your decision making process. You would probably still do it to help me out.
- But if I offered you $100 cash, now you would then evaluate if your investment of time is worth that much money.
- Interestingly, if you say, “I’ll give you a gift worth $100,” you now evaluate it the same way as you would cash.
This has interesting implications for a company’s innovation efforts.
If you offer cash rewards, people will determine if their efforts are worth the extra money.
Giving a gift without assigning a value will be a greater motivator. But if you assign a value to the gift (e.g., gift cards), you may reverse the positive impact of giving a gift. Giving “points” that can be accumulated and exchanged for prizes is a nice middle ground that avoids a direct value assignment.
From my experience, the best “extrinsic” motivators are the “priceless” rewards. These are things you can not buy – extra vacation days, a prime parking space, or dinner with the CEO. These can not be assigned a dollar value. And in the case of dinner with the CEO, this also taps into another motivator – status. After the dinner you can taunt your friends, “Guess who I had dinner with last night.”
By recognizing the way people make decisions, you can find more effective – and often less expensive – ways of motivating them.
You now also know more effective and less expensive ways of getting me to help your organization innovate. I wonder what I will be offered next.