Bankers' Bonuses rewards for simple mechanical tasks

I stumbled across this really interesting and entertaining video of Dan Pink discussing the social science behind  motivation and rewards. In the speech, he quotes some 2005 research where economists, D. Ariely et al, set a bunch of MIT students various tasks with varying levels of bonuses for success.

Their results were intriguing:

As long as the task involved only mechanical skill, bonuses worked as they would be expected: the higher the pay, the better the performance.


But once the task called for "even rudimentary cognitive skill," a larger reward "led to poorer performance."

These results have been borne out in many other studies too.

The logical conclusion of this research, if the bankers are right in that they need to be paid their huge bonuses, is that investment banking does not require even rudimentary cognitive skill. An interesting thought.

I'd recommend watching the whole video. It explains why, for most types of work, bonuses reduce performance rather than improve it and gives us all food for thought when it comes to rewarding our own employees.




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Become a Pivot Table Expert and save

Apologies for a blatantly promotional post, but I think many of you might find it very useful.

To celebrate the 1st birthday of Spreadsheets by Email I am making a very special offer on our Introduction to Pivot Tables course.

Purchase the Introduction to Pivot Tables video course on or before 25th February and receive a massive 50% discount on the purchase price.

But that's not all - Purchase the course before this date and you will receive a voucher for 20% off any spreadsheet you want built at Spreadsheets by Email.

So, what better time than right now to become a Pivot Table Expert.

End of blatant promotionalism.


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Using the OFFSET function in Microsoft Excel (Great for budgets)

The OFFSET function is incredibly useful, especially when looking up budget information. It allows you to look up data based upon its position relative to another cell.

The format is:

=OFFSET(reference,rows,cols,[height],[width])

[arguments in square brackets are optional]


where:

reference is the cell reference from which you wish to calculate the offset
rows is how many rows you wish to count down (up if negative) from reference
cols is how many columns you wish to count to the right (left if negative) of reference
height is the height of the range returned (1 if not entered)
width is the width of the range returned (1 if not entered)

To use this to look up budget data in management accounts:

Where your 12 months budget figures are in cells E5 to P5, and your current period number is stored in cell A5, you can use the formula =OFFSET(E5,0,A5-1) to return the current month's budget.

To return the cumulative budget for the current month, you would use the optional arguments along with the SUM function - i.e. =SUM(OFFSET(E5,0,0,1,A5)). This returns a the sum of the range that starts at cell E5 (month 1), has a height of 1 row and a width of the number of months to date.

Have a play with this function, see what you can do with it. Also, let me know in the comments below any other uses you have for this function.

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Please judge my blog jiggery pokery

I have made a number of changes to the layout of the blog and would appreciate any comments. I have tried to make it look cleaner as well as allowing additional information to be shown in a new side-bar down the right as well as the left.

Please comment below with any feedback.

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