Welcome to the bloggy home of Noah Brier. I'm the co-founder of Percolate and general internet tinkerer. This site is about media, culture, technology, and randomness. It's been around since 2004 (I'm pretty sure). Feel free to get in touch. Get in touch.

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Which Motivates Better: Financial or Tangible Incentives?

Which is more motivating, a financial incentive or a tangible one? Over at Predictably Irrational, Dan Ariely points to an experiment by Goodyear tires to find the answer. The company divided its sales team into two groups, giving one financial incentives and the other tangible incentives of equal value. I’ll let Ariely (at least I assume it’s Ariely writing) take it from here:

The results were very interesting; it turned out that the tangible-reward group increased sales by 46% more than the monetary-reward group. They also improved in terms of the mix of products sold by 37%. One explanation, and it seems to me a fairly good one, is that we can visualize tangible rewards (imagine yourself on a Hawaiian beach), which creates an emotional response. Money, on the other hand, is not accompanied by images as often (aside from maybe Scrooge McDuck swimming in piles of it), and lacks the emotional pull that tangible rewards have, so they’re less effective in motivating employees. I guess it’s called “cold, hard cash” rather than “future beach vacation cash” for a reason.

August 5, 2009