If you’re not handing out pats on the back to your team, you should be. It’s what gets the job done, apparently. Well, along with money, of course.
A new study from the Karlsruhe Institute of Technology (KIT) in Germany has found a formula for dramatically increasing performance and reducing error: appreciation + performance pay.
“A field experiment of KIT economist Petra Nieken and two colleagues revealed that a combination of performance-oriented piece wage and motivating words increases the performance by 20% and reduces the error rate by 40%.
Holy, smokes. Why didn’t you think of that?
In the field experiment, 139 students were given the task of electronically acquiring data for a research project. It was a simple task but required attention and care. Subjects were all paid the same basic salary but one group also received an small performance-dependent piece wage. Some people were also told the purpose of the task, that their work was appreciated, and that their results would have a positive impact.
Researchers found that these things worked best in combination.
“It was found that a few motivating words resulted in an improvement of performance only if they were accompanied by a performance-based payment. If an extra performance-based payment was made, but motivating words were lacking, this resulted in decreased performance and more errors… Combination with acknowledging, appreciating words is decisive for this negative effect being eliminated.”
The results are pretty impressive, and the formula is pretty basic. Say nice things and pay people for good work.
“We hoped to obtain such a result, but we did not expect it to be so clear,” a KIT scientist said.
The study was published under the heading “Hidden benefits of reward: A field experiment on motivation and monetary incentives.”