Here is a book:

drive_book_page

But better, here is a video clip that summarises said book.

And here is the basic summary:

  • As it turns out, bonuses are only a good incentive when you are performing a task that is menial and requires no thought process whatsoever.
  • Money is only important when you don’t have enough of it. Once your physical needs are met, money stops being a motivator.
  • In fact, once you head past a certain point, monetary rewards become anti-motivational.
  • From what I recall from the book (I read it a while ago), this is because the stress of losing that money by not being good enough becomes an increasing distraction as the size of your bonus goes up – until it becomes a serious hinderance*. *If I asked you to solve a quadratic equation, and I offered you $10 if you got it right, you’d probably be quite relaxed about doing the sum. But if I offered you $10 million to get it right, I reckon you’d probably hyperventilate yourself into leaving the answer blank. In fact, I’m getting a little stressed just thinking about it.

Based on the psychological studies that are out there, here’s what does motivate:

  • Autonomy
  • Mastery
  • Purpose

Paraphrased:

  • I want to decide what I want to do.
  • And I want to get better at the things that I like doing.
  • And in particular, I want to feel like I’m making a difference in the world by doing what I’m doing.

So in a nutshell, you’re really driven when:

  • You’re not doing a menial job.
  • You’re paid enough to not care about the money (or you’re already sufficiently rich)
  • You’re doing what you like doing, when you feel like doing it
  • You’re getting better at doing what you like doing
  • And you don’t feel like you’re being self-indulgent, because you’re helping the world become a better place.

There is a cynical part of my brain that wants to say

“So… We’re most driven when we have a dream job?”

Maybe that’s too cynical. I reckon that the real point is: stop paying big bonuses to the bankers.

Also, that video clip is so excellently illustrated that you should watch it just for that.

An appreciative shout-out to Gareth for mailing me the link. You’re a legend.

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.