When Pay Ruins Everything

Getting paid to do something you love can totally ruin the experience.

Odd, eh?

I am vaguely aware that there are many ways of understanding this phenomenon. Many investigators think we have more than one motivational system, and these systems compete - activating one can knock out the other.

One study I've found focuses precisely on this phenomenon. It's called Effort for Payment: A Tale of Two Markets by James Heyman and Dan Ariely, in Psychological Science (Vol15—Num11: 787-793). They were studying "homo economicus", and they wanted to see if adding compensation to a task would affect how much effort people put into a task. If humans are rational self-maximizers, they argued, then the more you pay them, the better they will perform. This is not borne out empirically. In their words:

A long history of research has demonstrated that rewards can decrease motivation and attitudes (Festinger & Carlsmith, 1959), alter self-perception (Bem, 1965), increase overjustification (Lepper et al., 1973), and turn feelings of competence into feelings of being controlled (Deci & Ryan, 1985). The debate over these findings (Eisenberger & Cameron, 1996; Ryan & Deci, 2000) has generally shifted to the question of what specific circumstances give rise to these counterintuitive effects.

This is very interesting from a management perspective, particularly in knowledge intensive/creative industries. We have all of these smart, competent people on staff - programmers, designers, subject matter experts - and don't they all sometimes seem to seethe with resentment, even though we are paying them to do things they initially seemed very *eager* to do?

Heyman and Ariely suggest that there are two kinds of "markets": monetary markets and social markets. Different kinds of goods and services may be associated with each market, but more to the point, the form of compensation offered differs as well.

When you offer to pay someone, you signal that you want to situate the transaction in the economic modality. If you offer to pay close friends and extended family members for helping you move apartments, most would energetically resist receiving money (except those recognized to be in need, but then the payment becomes a supportive gesture - sublimated into the social economy). However, the same friends and relatives who would refuse payment would gladly help themselves to a fridge and kitchen full of beer and pizza worth much more than the dollar value initially offered them. (Unless you mention the price, in which case they will want to help you out, and again the monetary exchanges will be sublimated into the social market - as mutual aid).

Offering them an hourly rate and paying them to the hour would be unthikable, unfeeling, rude... they might wonder if you had some kind of social functioning challenge like something in the autism spectrum. You are trying to put a money-value on the asset of having friends and family who will help you. You will, in a sense, be rejecting them from the social market, driven by reciprocal altruism, esteem, social standing/reputation, social network position, and all the rest. You'll be treating them like hired help, and repudiating, in a sense, their claim to special standing in your eyes...

The consumate example of this error, of course, would be offering payment to somebody for sexual relations they entered into for entirely social and personal reasons. But that would be more than shifting from social to economic markets, it would also drastically re-position that person in the social market, so there would be two re-valuations happening at once.

Interestingly, creative/competent people often use this sexual metaphor to describe what happens to them when they accept employment in a larger organization ("prostituting" themselves and their talents). They seem to perceive their position as affected by this same double-shift.

Heyman and Ariely make the following prediction based on the research they have referenced:

[This h]ypothesis...1 also predicts a distinction between exchanges in which payment is not mentioned (‘‘not paying at all’’) and those in which individuals are told explicitly that they will not be paid (‘‘paying nothing’’). Whereas not mentioning payment is likely to cause individuals to consider themselves to be in a social-market relationship, telling individuals explicitly that they are not getting paid is likely to cause them to consider themselves to be in a money-market relationship. Our framework predicts that not paying at all in the context of social market relationships can create higher levels of incentives than low levels of compensation in the context of money-market relationships, a prediction that is shared by many other accounts (Bem, 1965; Deci, Koestner, & Ryan, 1999; Festinger, 1957; Gneezy & Rustichini, 2000b; Lepper, Greene, & Nisbett, 1973).

One might add a personal economy of pleasure to the social and economic, to add that activities that are done for their intrinsic reward as hobbies also lose their appeal when done for pay, but let's stick with the social and economic distinction for now...

The interplay between social and economic markets creates a situation that "economic-man" rationalism would not predict, i.e. "Effort in exchange for no payment can be higher than effort in exchange for low monetary payment."

Strictly economic rationality would not predict this, but strictly economic rationality has been slow to pick up on the impact of social exchange behavior on economic exchange behavior. Market capitalism had not spread easily to nations and cultures that have had a history supporting other exchange customs. I remember when I was in Fiji for awhile, and in some of the marketplaces where native Fijian businesses were predominant, there were signs all over the place telling vendors not to sell goods on verbal credit! In the traditional Fijian village economy, the social exchange market dominates material exchange, and so a lot of the culture gives expression to social exchange values. In a modern cash economy, however, people had to learn to insist that business be business, and that payment be made.

I think some of us are biologically more sensitive to different kinds of signals of gain or loss, and that there may be some link between this and the "artistic/creative personality". I for one basically don't notice money, don't think of it, would rather not think of it, etc. I care what my salary is, but mainly as an indicator of social status - or more precisely, my social standing - where I stand in the eyes of my employer.

I love the recognition that comes from do superlative work, but I would far rather professionalize my work than be paid directly for each deliverable. I prefer to make my salary a background indicator of my social standing and status, and to then ignore it. When I do good work, I want it to be for intrinsic reasons - because I value good work, and because I have a will to constantly improve things, etc. I want to present my work to others, to discuss it with them, to gain recognition and to thereby gain social sanction to continue my apparently valuable work.

Note that this is precisely the incentive structure of the traditional academy. Maybe this *is* the best incentive structure for intellectual/creative types.

Don't some of the better employers in the US knowledge economy copy some aspect of this university "collegial community" incentive structure? Places like Google and Genetech establish "campuses", and send a strong signal to employees that the company is committed to make things easier for them so that they can concentrate on their work - which by implication means that the workers are highly respected and the company cares about their work very much. Can't you just seen every brainiac and artiste you know coming alive at the thought of that kind of social contract?

In the book "This Tipping Point", Malcolm Gladwell describes the "rule of 150" - the observation that human beings seem to have a processing limit, similar to the working memory limit of about 5-7 items, such that they cannot work in single units or organizations larger than 150 persons and still stay in the social-processing mode. It is a very robust observation, historically and in more recent research. Above 150, anonymity creeps in, people become identified by role and title only, and things begin to operate using formal mechanisms, drastically slowing the flow of information and the ability for the organization to react as an organic, integrated whole. (Maybe the economic market is nothing more than the social market pushed past this point of anonymity. Maybe the "brand" becomes a proxy social stand-in or social-brain signal on the otherwise anonymized commodity market...)  Some organizations have discovered this rule of 150. Gore Associates (mentioned in Gladwell's book) allows no more than 150 in any of their offices, and there are no job titles. Everyone is an "associate". The British corporation Virgin has also been mentioned by advocate of "flat-era" organization.

In such an organization, you would not be limited by job titles, held to a single task stream, forced to withhold contributions that do not fit your job title, etc. You would be paid for being there, for being you, and your task load would be determined by the interplay of personal, interpersonal and team commitments. You would also have a context within with to distinguish yourself by the quality or quantity of your output. Let the money trickle into the bank, but do it for the glory!

Again, can't you just feel all the creative types you know breathing a sigh of relief and unleashing the best of their talents?