Payoff – by Dan Ariely

Motivation is a strange word. It is usually considered as a magical feeling that occurs somehow unbeknownst to us all and it drives us towards doing certain things, pursuing certain paths and embarking on certain adventures.

Popular culture promotes the notion that you’re supposed to sit tight and wait for motivation to hit you so that you would do whatever you feel motivated to do. It’s not dissimilar to when people talk about trying to find their passion. Not unlike so many enigmatic words that are meaningless when blurted out without truly understanding the complexity of what they describe and define.

There are clear principles you can understand which control what influences you to do, or not to do, anything and everything. This book is a brilliant attempt to shine a spotlight on a few of these important principles.

This little gem from professor “Dan Ariely” touches on quite a few important threads that shape the tow line that pulls our efforts in any direction, that fascinating thing we call Motivation.

Motivation stems from positive expectations. Dan explains that motivation is synonymous with expending your energy and effort towards a purpose that is meaningful to you. Also, it is of the utmost importance that such meaningful existence would outlast the person’s mortality and expand into a legacy affecting the lives of others.

Counterintuitively, motivation is not corresponding to a permanent sense of pleasure, on the contrary, often enough, the acts we pursue towards a life of meaning is devoid of pleasure in and of itself, but rather culminate in the achievement of something of grand importance once you aggregate the entirety of your painful and duty-driven actions.

Motivation is all about a sense of usefulness and accomplishment. Motivation is also, at its core, a striving towards a sense of control and power to counter the perpetual feelings of helplessness in our lives. When stricken with calamities, only those who would find a purpose to their suffering can persevere and look beyond the pain and agony of the present moment. In a way, motivation is a byproduct of the uniquely human ability that sets us apart from all other creatures on earth which is the perception of time and the ability to envision a future that we can influence with our actions.

The easiest way to rob a person of motivation is to steal away their vision of a different future. You kill a man’s spirit when you convince him of the futility of his actions. It’s the classic Sisyphus torture.

In Greek mythology, King Sisyphus was notorious in his cleverness and deceit and was punished by the Gods for his self-aggrandizement and self-conceit in claiming he is cleverer than Zeus himself. His eternal punishment was to roll an extremely heavy boulder up a steep mountain which was tortuous all by itself, but the torture was magnified by the boulder rolling away to the bottom before it reached the top. The Sisyphean torture was to rob King Sisyphus of any and all feelings of accomplishment, doomed to live for eternity in unending frustration over useless efforts sunken into a futile task.

Dan tells a symbolic story from the movie “The Last Castle” starring Robert Redford. Prisoners in a military prison were ordered to perform an arduous task of building a stone wall using heavy slabs of rock. The task was grueling but the prisoners managed to complete building the stone wall through Robert Rdeford’s powerful leadership and his ability to motivate men. They were following his command pursuing the pride of achievement at the end when they finish their great task. The taste of that great accomplishment was then turned to ash when the warden ordered them to tear it all down and move the pieces back to where it all began.

That was their true punishment, leaving in their mouths the lingering bitterness of aimlessness. The cheers of joy that initially roared when they finished building the wall were nowhere to be heard once they finished tearing it all down.

That’s how easily you can demotivate any single human being by making all their actions and efforts meaningless.

It relates to the concept of “equality of outcome” in communism. Citizens under communist rule are in part demotivated by the knowledge that it doesn’t matter how hard they could work because eventually, they will get the same reward as everyone else. It’s a shortcut to turn people apathetic and not willing to give out all of their efforts.

It brings to mind the toxic practice of giving little children playing competitive sports ‘participation trophies’ whether they win or lose. It’s meant to soothe their childish wounded pride but it robs them of personal drive and agency in the long run.

That momentous movie scene could very well have been inspired by the horrifying tales of the tortures of Nazi concentration camps. Jewish prisoners were ordered to carry heavy bags of soggy wet salt from one end of the camp all the way to the other end. A task hard enough for a healthy strong person, but these were malnourished prisoners moving in the bitter cold to cover the vast distances of the prison camp. Concentration camps were huge in size and it took them hours to go from one end to the other. The disheartening and truly evil torture was actually awaiting those strong enough to make it all the way through without dying. When they had reached their destination they were ordered to take it all the way back to where they picked it up.


It is widely understood that motivation could be driven by tangible and intangible factors. The book puts the emphasis on the importance of intangible motivation and it makes the case that it does count for far more than tangible motivation.

Acknowledgment, as one of the strongest of intangible motivators, is a major factor that is proven by research to drive human effort and promote initiative, loyalty, and dedication. The research mentioned by the author explains that basically, you can be motivated to go on doing the most difficult of tasks with less compensation just as long you get sincerely acknowledged and recognized for your efforts.

The fastest way to guarantee that someone will not persevere or reach deeper within for more energy to do their task is to utterly fail to provide them with the recognition and acknowledgment they deserve. A faster way, still, is to intentionally let people know that you do think of their efforts as worthless and that they are being ignored on purpose and not merely by neglect. Trampling over people’s sense of achievement and recognition which is normally acquired through the completion of their assigned work is a sure recipe to lose their positive participation in your organization.

“Negative motivation is a big deal because when people are disengaged, they show up late, they leave early, they fail to keep on top of their expense accounts, they do the least they can, and sometimes they even actively sabotage their employers.”

The author correctly puts forward the notion that part of the reasons why employees are severely demotivated in the modern workplace is because of the persistence of the industrial era business model which perceives that dealing with the labor force is based on an oversimplified transaction. Employment is viewed as a simple transaction of time spent doing some work for a predetermined compensation for that work. The meaningfulness of the work is not at all a factor.

Based on related research, Ariely provides us with a crucial piece of information about how modern management in any organization falls short in assessing the importance of motivation on the effectiveness and productivity of the workforce. Research participants were taking part in a study aimed at understanding how people would be able to correctly estimate the value of meaningful work in contrast with meaningless work.

Those study subjects in that estimation experiment were presented with the procedures involved in two other studies. One experiment had the test subjects assigned tasks that were designed to demotivate them, while the other experiment had tasks designed to instill a sense of meaningful accomplishment.

Participants of the estimation experiment were asked to assess and predict whether providing meaningful tasks would increase productivity or not, and if so, to what degree.

The results showed that they correctly anticipated the increase in productivity by providing meaningful tasks, however, they gravely underestimated the value of introducing meaning into the work.

They assumed that participants in a meaningful task would offer a slight increase of only one more finished product than their counterparts who were offered a task designed to deprive the workers of all sense of meaning. The actual data showed that having workers do a meaningful task increased the number of finished products by 4, which is a more significant increase.

“The consultant experiment showed that people dramatically underappreciate the extent and depth to which a feeling of accomplishment influences people. Your CEO most likely reasoned that people who work for him are like rats in a maze, only instead of working for food, you work for a salary. If he wants you to start working toward a different goal, he probably thinks that all he needs to do is to direct you down a new path, and you will quickly start working toward the new goal. He seems not to appreciate the effect that stopping your big project will have on your internal motivation.”

What utterly crushes your motivation is not just the feeling of wasted work. “It’s the sense that your own life matters less, that who you are has been belittled somehow. You haven’t been working just for a paycheck or even a vision for the company. You’ve been working for yourself by building something that you cared about, and now all of this is gone.”


Charlie Munger the business icon and longtime partner of Warren Buffett, in his lecture “The Psychology of Human Misjudgment” preached the gospel of “incentives” which he considers to be one of the most potent forces to shape people’s behavior. Alas, it seems that the corporate world is highly invested in the creative murder of the motivation of their own employees.

Some companies take the organizational hierarchy to the extreme and assign employees specific numbers to reflect their position in the organization and to which tier they belong. The ‘scarlet letter’ attached to their credentials determines how they are perceived by those above them in the company hierarchy as well as those who lag behind in the lower tiers. It also determines to what degree their opinions can be considered seriously.

A modern steeple of the corporate world is the cubicle which serves as a powerful demotivator to swathes of employees worldwide. The cubicle is a shameful place of being at the bottom of the business hierarchy and it means the employee is expendable, replaceable and not important to the company to justify any investment in such an employee who is not expected to be working there for very long. Some companies took that further and banned employees from personalizing their workspaces while other companies managed to go even further than the rest and banned ownership of cubicles altogether, literally turning the office into a first come first serve sort of common workspace.

In my humble opinion, those types of businesses that understandably have the highest employee turnover are predatory businesses that consume the energy and sanity of their employees. Their initial aim of cutting back on their overhead expenses correlates with their poor efficiency and relatively poor profits compared to what they can achieve with a different business philosophy.


Dan Ariely made a point of explaining to us the obvious fact that people never really grow up. We’re all still kids at the core and in the modern adult-world, a company is a pseudo-parent that can be nurturing for its employees or quashing them in cruel overbearing ways.

Companies out there need to be evolving the office culture and providing a model of fostering employees’ sense of individuality and allowing them to express their creativity. A company needs to reinforce the feelings of meaning and connection in their employees, treating them with respect and appreciation for their intelligence, creativity, and uniqueness.

Allowing your employees the space to grow, advance and expand in a creative environment, never sparing the opportunity to offer positive feedback and a kind word with some real appreciation, is a certain foolproof way of building a strong office culture that supports a true sense of belonging and loyalty.

At Zappos, for instance, the office setup is extremely reflective of the company’s deep conviction of the importance of a sense of connection and community. Employees are encouraged to freely personalize their own space.

I was recently introduced to the book “Delivering Happiness” by Tony Hsieh (pronounced ‘Shay’), the former CEO of Zappos. In his book, Tony claimed that during his time as CEO at Zappos he aimed at creating workplace ‘happiness’ and a company culture aimed at making employees feel a sense of community.

True to form, as the ever entrepreneur, Tony Hsieh, and his collaborator, and now CEO of the new venture, Jenn Lim packaged that ‘business philosophy’ into a consulting firm under the same name: “Delivering Happiness.” DH provides training and offers as a service to other companies the management strategies they can apply to transform the work environment into a happiness oriented culture. They’re taking the real-life case study of what happened at Zappos as proof that their motivating office culture will transform any organization into a more productive and profitable business.

Seeing a business opportunity and a market for an office culture aimed at motivating people to perform on a higher level solely based on manipulating their environment in a way that’s conducive to a sense of personal fulfillment is an attestation to the high value of curating a motivating environment.

“There is plenty of marvelous human energy lying dormant within most of us. And once those of us who are parents, teachers and managers learn how to better tap into it, the better off we will all be.”


How to escape the tedium of doing a thankless job which offers no real incentive for you to do it well?

That question is one we all struggle with daily. This brilliant book reiterates the timeless advice that you need to find meaning in your work.

Reframe the situation into something that you can use to your benefit. You might want to look at the ways you are positively affecting people’s lives with your work. You might also consider the learning opportunities available to you in that position. It boils down to you finding a window from which you can see the pride in your work and meaning beyond the task.

Dan asked a Broadway actor about his ability to perform the same play night after night, for years. The answer is that he will tweak his performance in creative ways to make each and every performance a little different. He noticed how the audience received his performance and readjusted. He was able to find joy in making little experiments that made each performance unique.


Another brilliant point in the book is about the “IKEA effect.” People can be extremely motivated if they can develop a sense of ownership over the fruits of their labor. People develop a deep sense of attachment with their own creations, be it ideas, opinions, intellectual perspectives or personal projects.

The magnetic effect of self-assembly of any project (or your own life for that matter) garners a deep sense of pride and the value you add to the finished creation is something that will most certainly motivate you to cherish your own work. It isn’t a great mystery, but we’re constantly programmed to ignore it.

People get immense empowerment when they’re adding value into the world, making something out of nothing, being useful and appreciated for their contributions, doing the greatest amount of effort and investing huge chunks of their time, the most valuable of human resources, into the creative process of any project that is meaningful to them. The pride and sense of ownership and progress resulting from such work would stoke their motivation towards higher aims and grander visions of the future.

The more time and effort a man invests in his creation, the more value he attaches to his work and the more compensation he thinks he’s due. Such a man is incapable of accepting the low value assigned to his work by the buyer/appraiser/employer and anything less than what he deems fair price will result in disdain, resentment, and bitterness. Such negative feelings will result in expending only enough effort worthy of the pay and outright sabotage of the work if he’s forced into it.

Allow people the means to feel disempowered, useless, replaceable and redundant and you will give way to the greatest amount of evil and suffering to destroy a person’s life.

If you’re stuck at such a dark place, you should fight for the reasons and means to stoke your own motivation and gain back your personal power.


The Chess Grandmaster and masterful wizard of the financial markets “Adam Robinson” tweeted the following:

“Jedis had mind tricks, here’s a counterintuitive MOOD technique.

Do you know anyone in a dark place, struggling with powerful negative emotions, depression, grief, perhaps asking the meaning of life?

Instead of “being supportive”, “trying to help”—ASK him or her for help.”

What a brilliant thought! What a wonderful concept! This is something that I simply was ready to understand at this exact moment in my life. When hope escapes you and your bag of tricks is all tapped out, when there’s no light at the end of your tunnel and it seems as though you are permanently stuck in a dark lonesome place, reach out and help someone.

Be useful in another person’s life. Lend aid, assist and give out your energy in the honest worthy endeavor of making someone else’s life better. What a great relief! What a great distraction! We’re only the most miserable when we’re stuck in our own heads, being our usual selfish limited selves. Redirect your focus towards the other, you will find hope, joy, love, and peace in helping someone other than yourself. And who knows, perhaps in doing so you get out of your own way and stop blocking yourself from finding a better way and a better life.


“We are strongly motivated by identity, the need for recognition, a sense of accomplishment, and a feeling of creation.”

Dan touches on “identity” as an integral part of what motivates us to do anything. The world that’s congruent with our own identity is work we are very motivated to do and sink into it all of our time and effort. It’s prevalent and can easily be noticed by creative people, authors, painters, filmmakers, artists, craftspeople, hobbyists and everyone who comes alive when lost in their own creative world.

That same reason, identity, is one of the main reasons why 3D Printing is expected to explode once made available to the mass market. People will be able to customize every single product to their preference which would make them involved in the process and hence an attachment will develop with the product. Even if you get a template from the manufacturer that has all the major components pre-programmed, your user customization will make the product your own. It’s another variation of the exact same lesson learned from the famous 40’s readymade cake boxes story.

The company P. Duff & Sons introduced the readymade cake powder, where homemakers would be able to add only water to the ready mixture and then bake it into a delicious cake. Sales were down even with the obvious savings in time and convenience for the average housewife. The fix to the problem was to take the eggs and milk powder out of the mix and in doing so get the consumer involved in the making of the cake.

When you’re feeling like you’re involved and that your contribution is essential to the work, especially when you’re allowed to be creative and customize your own work and paint it with your identity, you reap a sense of pride, ownership, and pleasure from doing something that is uniquely yours.

This investment of time and effort turns into love and that turns to bias. Our opinions and high valuations to our work is specifically limited to ourselves. Our appreciation for the product of our labor doesn’t necessarily mean that it will be appreciated just the same by everyone else. Usually, it is not.

Human cognitive biases control every aspect of how we perceive the world. A beautiful simplification of how you perceive the world is mentioned in the beautiful book “The Untethered Soul” by Michael A. Singer. When you’re looking at a tree, you see the trunk, the leaves, the flowers and how it moves with the wind. But the voice inside of your head narrates the world to you. You might say: “What a beautiful tree, it’s been washed clean by the rain. It smells magnificent. It reminds me of the tree my father planted when we were children. I remember my brother used to climb up to the top branch. I miss my brother. I really should give him a call.”

It does sound familiar right? That’s how we see the world, it’s all subjective. Your mind doesn’t see an abstract version of the universe, but you only see your own interpretation and judgment of how everything and everyone you interact with meshes with your identity, your own thoughts, your own experiences, your beliefs, and your expectations. When two people are looking at the same exact tree, they each conjure up a completely different story from the same sighting. You paint the outside world with the colors in your own head.

The same thing happens when you assess your own work. You get a sense of biased attachment and the mere fact that you know how much effort you put into the work makes it worth a whole lot more than it would to an unbiased observer. Your sense of ownership also will make you oppose any attempt to steal your appreciation of what is your own. It is the same psychological mechanism that makes a mother feel the deepest sense of love, attachment, connection and appreciation towards her own children.


A large portion of the text is aimed at how a company should handle the topic of motivation.

We shouldn’t delude ourselves into thinking that a modern company can figure out how to perfectly incentivize its own employees. Negative and positive incentives are the two basic pillars of workforce management. Negative incentives are limited in scope; you do this you’re fired or if you don’t do that you’re also fired. You can’t keep your employees in modern days if you made sure they feel like they’re prone to easily getting fired one way or the other. They will jump ship in droves if you drive them by the whip and keep a sword hanging over their necks.

Slavery in human history was a business decision. Back in ancient human societies if a tribe defeated an enemy tribe at war or in a raid, they can spare the lives of the conquered and the defeated as a free-for-life workforce. Later that evolved into sailing ships to less advanced nations and taking people into slavery by gun and sword and selling them as a product to the plantation owners who would employ them in large cotton fields. That straight forward approach is no more, humanity is more civilized now, right? or are we?

Modern corporate slavery has different sets of rules, they’re focused on the more effective means of driving high productivity, efficiency and loyalty: Addiction to positive incentives.

Well, it is worth noting here a quote I love by the brilliant Nassim Nicholas Taleb:

“The three most harmful addictions are heroin, carbohydrates, and a monthly salary.”


Management has a huge set of incentives they can offer to their employees: annual bonuses, spot bonuses, promotions, titles, company retreats, health benefits, retirement benefits, etc. And that’s only the tangible set of incentives, there are also intangibles like praise, acknowledgment, camaraderie, etc.

“Because motivation is part of almost everything we do, and because it influences and sustains virtually every aspect of our lives, it is impossible to come up with one simple set of motivational rules.”

Incentives work. Just not exactly as you may think. A manager faces the same challenges as business owners, policymakers, legislators and parents. In such a position of responsibility, the challenge is always to dynamically adjust the incentives, both negative and positive, tangible and intangible, that would pull the entire family, or nation or organization or company, in the right direction towards positive outcomes. It’s never easy to find the right combination or formula that would correspond with the ever-changing landscape in the world.

The book discusses the topic through scientific research experiments. One such lab experiment shows that when the bonuses become quite large, performance drops dramatically.

The laboratory experiment was done under controlled conditions and not a real-life situation, but still, it offers valuable insight. The counterintuitive result is due to the huge pressure of such a huge reward causing anxiety, stress, and fear of not achieving the necessary goal.

A real-life case study experiment done by the author and his research collaborators detailed in this book targeted a real-life business where productivity is quantifiable and can be measured in certain constant KPI’s. The aim was the study of the effectiveness of different types of motivation.

The Intel Semiconductor factory had a work cycle lasting eight days. Each workweek is comprised of four days of twelve-hour shifts, followed by four days off. Management had a motivational scheme for the first day of the workweek, after four days off, to get the workers’ performance and productivity mojo back. On the first day of the workweek, a manager will tell the workers their day target and they are promised a cash bonus reward of $30 if they hit their mark by the end of their shift. Testing required a control group that was offered no bonuses or incentives at all. The other test conditions included a group that was promised a voucher for a pizza instead of the cash reward and another group that only got a text message from the boss saying “Well done!” So the four groups are money, pizza, compliment, and control.

Results were measured and compared for the very first day of the work cycle and then the ensuing three days. Keep in mind, the incentives were offered only on the first day of the workweek.

As you might expect, any incentive was better than no incentive at all, so all three incentives performed better than the control group.

Interestingly, pizza boosted performance by 6.7% and compliments performed almost identically with 6.6%.

Surprisingly, money performed less impressively with only a 4.9% increase in productivity.

I have my own interpretation of these results. My understanding of the experiment is that before the experiment started workers have been doing the same job for the same cash bonus. So, from the perspective of the cash bonus group, it was business as usual for them, the same old same old. The increase in productivity in the pizza and compliment groups is probably due to just the novelty of the newly offered rewards as some people would like the notion of a pizza reward and others would enjoy the acknowledgment of their efforts, but also because it breaks the tedium.

The control group, in my opinion, was doomed to perform worst of all because they were actually deprived of all incentives as opposed to being offered cash on the first workweek before the experiment started. They were actually demoted, of sorts. Keep in mind that being on an assembly line doing a mundane repetitive job requiring limited skills and working for long 12-hour shifts is an abysmal experience.

The ensuing three days of the workweek had an even more interesting revelation. The money group performed 13.2% worse than the control group on the second day but improved on the third day by only dropping 6.2% relative to the control group and their productivity drifted back to the baseline of the control group by the fourth day, dropping only 2.9% relative to control.

So, money performed as the worst of incentives in this experiment because it resulted in a higher pay to the workforce and a 6.5% drop in performance over the entire workweek.

Pizza offered on the first day increased production by 6.7% and then over the next three days drifted back to the baseline. Compliments performed the same way from an increase of 6.6%.

This culminated in an understanding of the misconception of the effectiveness of money bonuses as motivational tools for increased productivity.

Intangibles that make people feel appreciated and valued are considered much more effective but only if it’s genuine and not scripted or automatic.

“The more a company can offer employees opportunities for meaning and connection, the harder those employees are likely to work and the more enduring their loyalty is likely to be.”


The main takeaway from the study is that monetary incentives work in boosting performance temporarily, but once you take away that bonus money you get way less productivity than the baseline performance without the bonus.

Research noted in this book by the author showed that verbal encouragement and small gifts or benefits given instead of money don’t only give out more of a boost in productivity and performance, but once taken away, productivity simply drifts back to the baseline without taking a sharp dip performance.

The problem with money is that it is a direct measure of value. If you give your employees a higher monetary incentive for the same work they did without the incentive, you really can’t take it back or else you’re screwed. You will not even get the same baseline performance your workers started with when you gave them the incentives, you will get less work out of them because now they think they are being underpaid and undervalued.


There is a mention of an interesting study about the importance of intrinsic versus extrinsic factors in motivation. Intrinsic motivation or intangible motivation is the degree to which we are engaged in a task for its pure enjoyment. Extrinsic motivation is the transactional tangible payout or compensation for doing a task.

“When we’re engaged in a task we focus on the inherent joy of the task, but when we think about the same task in advance, we overfocus on the extrinsic motivators, such as payment and bonuses. This is why we are not good predictors of what will motivate us and what will crush our motivation.”

It’s the same exact dilemma facing every single college graduate: what should I do after graduation? What line of work should I pursue? Should I chase after the money or accept low pay for a very long as the price for gaining experience and career capital? (Anyone struggling with the subject should read “So Good They Can’t Ignore You” by Cal Newport).

We’re essentially completely incapable of predicting the profession that will be the most rewarding in the long run. People say love what you do until you do what you love and misinterpret that as a license to work at a job that makes them feel miserable until they find themselves or find their passion or figure out what they want to do.

The biggest problem with that is you can easily get stuck and forget about giving enough time towards developing your skills in the work you enjoy the most. Or you’re more than likely to take the easy way out and quit trying altogether.

But of course, it’s never too late to course-correct and become a person of clear purpose no matter what is your situation or where you work. Certainly, you will not reach the same level of competence and mastery as someone who has dedicated their whole life from very start to master that which you love. Compound interest matters a great deal and your time in this world is limited whether you’re aware of it or not. The real truth is that despite your being late will limit how high you can climb up the ladders of mastery and achievement, all the same, you will get farther than most everyone because most people never even start.

Truth is trying to be good at anything you might think you love is going to be really hard and you will feel miserable for a very long time. The big difference between working really hard at something that makes you miserable but you enjoy doing, and another that hate with every fiber of your being is that it will hold a certain meaning to you and you will have a purpose that will get you a great deal of satisfaction out of all your hard work.

Such fulfilling work is whatever we’re able to do nonstop and lose track of time, regardless of how hard it is. It’s what Mihaly Csikszentmihalyi calls being in a state of ‘Flow.’ It’s any type of work that engages your creativity and ingenuity. It seems like there’s a high price to pay if you go against your natural inclinations and the work that intrinsically engages you, challenges you and motivates you.

It’s all subjective though. You might be reading this and thinking that this is all a load of crap. Some people drift in the path of least resistance and do some work in which they’ve already had a great deal of experience, such as a family business, or the same profession of a parent who had filled their ears with talk about work. Some people, you might call realistic, simply hang on to whatever job that will have them, all the while thinking that boing picky and choosy is a luxury they don’t have. The ‘failure to launch’ group will be stuck at the start line suffering from analysis paralysis, those are the forty-year-olds who still don’t know what to do with their lives, those are the most miserable and bitter, the regret and pain are running through their brains like battery acid.


Caring, love, and goodwill are priceless.

There’s a related simple intuitive fact noted by the author you must be aware of when trying to offer money outside of the framework of transactional work for money situation. When people do you a favor out of love or when someone with whom you have a special relationship does something nice for you, or even when a complete stranger goes out of their way to help you, offering money in return is considered an insult. It puts a disproportionate value on something invaluable. It cheapens the act of kindness and makes people feel like they’re only treated as hired help and not family. You do favors for family and friends.

Paolo Coelho the magnificent author of “The Alchemist” wrote in one of his books about the ‘favor bank.’ A mysterious place where all successful people make many deposits and in return, they get favors back. When you’re doing someone a favor, there’s a high probability that you’d get upset if they tried to offer a cash compensation instead of appreciation. If you really think about it, goodwill is much more valuable and pays a higher interest in the long run. A person lacking the finesse to understand that offering money in return is the worst deal ever will go through life convincing people that doing him or her any kind of favor is a bad investment. Most people who don’t get someone to volunteer to help them out successfully managed to alienate everyone who’s ever done them a favor. Their lives get even worse if they’re too proud to even ask help.

Asking for help is an unwritten contract to pay back later with the same currency: a favor and a helping hand. Asking for help is a code for trust. Trust is the bedrock of all human interactions and the very fabric of human society.

The same dynamics can be present in the modern corporate world. Companies can offer goodwill gestures and hence create a relationship of mutual trust. When the company culture promotes distrust and disregard for loyalty and keep the quid pro quo monetary compensation with an emphasis on shaving off any amount of disciplinary salary deductions off their employees’ paychecks. Such a business model is poor business practice.

Business is transactional, relationships are not. When you’re in a job doing the grunt work to make the products and your boss who is taking care of the business on a higher level than you, both of you, are sharing the profits from the same income, your piece of the pie is a whole lot smaller than what your boss and the business owner are getting. Relationships, on the contrary, are a positive-sum game. Your piece of the pie gets bigger with every new relationship you cultivate because basically, you are now sharing a bigger pie.

The more loving and caring the environment, the more people will feel motivated to be productive and vice versa. In short, the group dynamic, and how much it promotes community and goodwill, is the decisive factor in their cooperation, motivation, and productivity.

The type of relationship you establish with your environment and the people in it drastically dictates how you behave. Transactional relationships are inherently short-sighted and deemed appropriate only for the immediate and short term prospects. You are not motivated to make any investment in the future if all you see are the short term outcomes. That’s why tourists are globally scammed by local traders and shop keepers. If it’s a one-off transaction and that lovely foreign tourist couple visiting your small shop will soon be on their way back home never to be seen again. It only seems logical, though very dishonest, to sell a little souvenir trinkets for 10 times the retail price. The same shop would never dare to offer such extravagant prices to the local customers with whom there’s a long-standing relationship.

You are never bothered to make any energy investment in a short term interaction, be it with a customer, employer, romantic partner, colleague or apartment.

So, the basic clear-cut way of guaranteed loyalty is to create an environment where all interactions are aimed at a sustainable long term relationship with both parties understanding that it’s mutually beneficial to stick together for an extended period of time. Only then, you’d be motivated to invest more time, live, energy, warmth and trust.

For a company, that long term commitment can be expressed in the form of an investment in employee education, long term well being and health benefits, investments in personal growth and a path for promotion and advancement within the organization. This sort of culture most certainly makes being part of such a community something valuable and it considerably affects the time period of employees sticking with the company.


Dan contrasts the economic theories of Karl Marx with those of Adam Smith. Considered as the father of economics, the theories in “The Wealth of Nations” explained the importance of breaking a large task into components and assigning each specific smaller task to a specific person. That developed specialization would translate into higher efficiency in the production process. His notable example is of the pin factory. Where having an employee create the pin from start to finish would render the product quality of questionable variance, the more efficient alternative would be “the division of labor.” One person would draw out the wire, the next person would straighten it, the next cuts it, the fourth on the line point it and the fifth grinds the top for receiving a head.

Marx, in contrast, spoke of the “alienation of labor.” A laborer in Adam Smith’s pin factory would be working on a small sub-task, in a small part in a larger enterprise, with no concept of the bigger picture, no idea what his project is all about, or how it fits in with the organization and no idea who will use the product he makes. Such a worker is expected to develop no connection to the organization, the project, the end-user, or the outcome.

The recipe for a healthy work environment in the knowledge economy, according to Dan Ariely, is not easy. But it requires the merger of both ideologies, division of labor while harboring a company culture that nurtures engagement, trust, and goodwill. In the modern knowledge-based economy, creativity is priced higher than the Adam Smith industrialist revolution type of efficiency. Everyone needs to have a fair understanding of the larger meaning of their labor and let’s leave mindless tasks to the robots, they’re more efficient than humans anyway.

“To me, the lesson from our research on motivation seems very clear. As we become meaningfully engaged with our work, we become both happier and more productive–a win-win situation if there ever was one.”

Dan, again and again, mentions the importance of goodwill in creating a motivating environment in the company culture. When taken out of the equation completely and all relationships are bound by ironclad rules, regulations, contracts and disciplinary actions, it leads to a poisonous work environment. It’s easier to recognize the value of goodwill in our personal lives and social interactions, but it’s not that clear in the workplace. We all need an encouraging word here and there, and a small gift of sincere appreciation. Goodwill is really easy to nourish and to keep alive but it’s even easier to kill it with the wrong reactions and overreactions.


In the final chapter of the book Ariely circles back to the deepest of our instincts which is for our lives to have an everlasting meaning beyond our time on earth. Leaving a legacy is one of the most powerful motivators in life.

Consider how ancient kingdoms preserved the bodies of kings and queens in the most extravagant tombs. Consider how human beings have many laws and rules of writing wills and bequeathing their belongings and possessions. Consider the traditions of funerals in all cultures of the world.

We all as humans have a deep need for “symbolic immortality.” We want to outlast our physical life and be remembered through the things we leave behind us. Our children and our legacy after we pass along are all that’s left. This is why athletes break records, people aim towards high achievements in science, music, art, and politics. This is why people pursue records in the Guinness world record and why wealthy individuals create charities and foundations.

We are seeking immortality in other forms because we can’t physically live forever. What drives a person to go through life is a complex maze of dynamically changing reasons.

To echo the words of another author, Simon Sinek says: Start with Why! If you want to take your life beyond your current situation, if you want to help your children find their purpose and if you want to help anyone to lead a happy meaningful life, you start with finding a reason that would drive their energy and push them towards loftier goals beyond the right here and right now.

The Miracle of humanity is our ability to understand the concept of future time. Make yourself and others see beyond the present and give them a worthy endeavor and you will be doing everyone and yourself a great favor.

Payoff: The Hidden Logic that Hides Our Motivations

Dan Ariely




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