Workers could be wasting their efforts and employers failing to encourage improved performance because of the inherent limits of the human brain, according to new neuroscience research sponsored by the Chartered Institute of Management Accountants (CIMA).
Academics from the Erasmus University’s Rotterdam School of Management and the University of Ljubljana in Slovenia measured and analysed participants’ brain activity, using functional magnetic resonance imaging (fMRI), while they performed a series of computer-based tasks, measuring their ability to assess information under different time pressures and types of distractions. The researchers distinguished between situations in which managers received a monetary reward for speed and accuracy and a different scenario where managers experienced social pressure to perform well. The study discovered that while monetary incentives and social pressure result in people working harder, their performance seemed not to improve for work that requires vigilance and attention.
Prof. Dr Frank Hartmann, Professor of Management Accounting and Management Control at the Rotterdam School of Management, Erasmus University, said: “If basic biology limits our ability to improve at certain types of work, we need to think more imaginatively about the way we measure and reward work performance. It may be much more task specific than we are currently inclined to think. Businesses need to recognise where performance limits may lie and avoid frustrating employees when results do not reflect best efforts. Organisations should take care that performance assessments accurately capture the efforts of workers, both to measure whether targets and incentives are effective and to ensure that individuals are rewarded fairly.”
Dr Ian Selby, Director of Research and Development at CIMA, said: “This is a fascinating study, and it indicates that many companies are causing pointless stress to employees, or are wasting money on ineffectual bonus schemes. Clearly, for areas of their business which depend on vigilance and attention – such as governance or quality control – firms should consider alternative incentives. “There is a wider point too. Modern companies have a large set of incentives available to them, yet many keep reaching for two in particular: exerting pressure from above, or incentivising through bonuses. In many cases these tactics work, but as this research indicates, sometimes these are simply the wrong tools for the job. This is the equivalent of a builder trying to make an entire house using just a screwdriver and a hammer. The solution is for organisations to innovate. They must look at new ways to manage and incentivise people, using the same mindset as they would for product development.”
