Saturday, November 5, 2011

Do Big Bonuses Improve Creativity?

If nothing else, having bills to pay can get you off your butt.  After Mickey Spillane, the writer of detective stories, achieved his first big success, he decided to take up residence at a popular seaside resort and enjoy the sunshine.  On the rare occasions he decided to work, the ideas wouldn't come, but he was financially secure, so it didn’t bother him much.

All the while, his bank account was steadily shrinking. Once, some unexpected bills came up and overnight Mickey's financial situation went from comfortable to desperate. Almost immediately, good salable ideas began to percolate in his mind, and out of necessity he wrote one of his best stories and went on to enjoy a long and outstanding career.

While poverty can be a great motivator to get you to work, the promise of extra money when you’re already comfortable can actually stifle creativity.  That is the conclusion of Teresa Amabile, the head of the Entrepreneurial Management Unit at Harvard Business School and the only tenured professor at a top business school to devote her entire research program to the study of creativity.  She and her research team collected nearly 12,000 daily journal entries from 238 people working on creative projects in seven companies in the high-tech, chemical and consumer products industries.  She discovered that people are most creative when they are self-motivated and when they care about their work.  But when they start to worry about their bonuses, and pay-for-performance plans, they start to get risk averse.  To “guarantee results” they stick to what has worked before and fail to innovate.

When we are chasing after financial goals, we usually think we are seeking self-improvement.  Yet we’re actually more motivated by a fear of loss than the dream of gain.  Our greatest fear is losing ground.

-Excerpt from the book Broke is Beautiful by Laura Lee