As a leader, how do you motivate staff? Does the motivation come through some form of reward such as recognition or praise - or something more tangible?
The Russian economist Anton Suvorov has constructed an elaborate econometric model to demonstrate this effect, configured around what's called "principal-agent theory". Think of the principal as the motivator - the employer, the teacher, the parent. Think of the agent as the motivatee - the employee, the student, the child. A principal essentially tries to get the agent to do what the principal wants, while the agent balances his own interests with whatever the principal is offering. Using a blizzard of complicated equations that test a variety of scenarios between principal and agent, Suvorov has reached conclusions that make intuitive sense to any parent who's tried to get her kids to empty the garbage.
By offering a reward, a principal signals to the agent that the task is undesirable. (If the task were desirable, the agent wouldn't need a prod.) But that initial signal, and the reward that goes with it, forces the principal onto a path that's difficult to leave. Offer too small a reward and the agent won't comply. But offer a reward that's enticing enough to get the agent to act the first time, and the principal "is doomed to give it again in the second." There's no going back. Pay your son to take out the trash - and you've pretty much guaranteed the kid will never do it again for free. What's more, once the initial money buzz tapers off, you'll likely have to increase the payment to continue compliance.
As Suvorov explains, "Rewards are addictive in that once offered, a contingent reward makes an agent expect it whenever a similar task is faced, which in turn compels the principal to use rewards over and over again."
From: Drive by Daniel H. Pink
Published by: Riverhead Books