Incentivisation and Motivation - the Daniel Pink Way
Posted on September 24th, 2009 by Paul McArdle – 5 Comments.
An article “How to make the rats run harder” in the AFR recently pointed me in this direction, which is great. The article was written to promote a book “A whole new mind”, and references another, “Predictable Irrational” by Dan Ariely. We have dutifully added both to our Amazon cart and will review in due course.
The article, and associated materials, is very relevant to discussions that are ongoing within our company about how to meet the challenges of the next 10 years.
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The basic premise:
As is noted ad-nauseum these days – the lower paid, unskilled or semi-skilled work is being outsourced to other countries, or automated.
For people in OECD countries like Australia, that leaves everyone who remains chasing a growing number of jobs in the “knowledge economy” [replace with your favourite buzz-word here].
To motivate such people (where creativity is a core part of the job), a fundamentally different system of incentivisation and motivation is required, compared to the previous (Taylorist) world in which a crude combination of carrots and sticks was good enough to achieve an outcome.
Indeed, it is argued (below) that the system of incentivisation that works in Taylor’s world (where everyone is treated like monkeys) is actually counter-productive for the “arty-farty creative types” (which we all are now).
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Here’s the YouTube Clip:
Pink (no, not this one, but that one) spoke at “TEDGlobal 2009” in July 2009.
Grabbed this from this YouTube address.
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My Personal Experience
Given that I have worked & spent considerable time in more than 20 different workplaces/companies (ranging from huge multi-nationals to small start-ups, like the one I am running now) across 9 different countries by working in a professional capacity over the past 20 years, I have a pretty diverse range of experience on which to form my own personal views (though I still understand that they are subjective views, rather than being truly objective).
For me, there were some environments where I felt suffocated (thanks, Yan, for helping me escape from one!), whilst others in which I felt truly empowered (as opposed to the Management Consultant’s weasel words for a workplace that’s more aligned with “pain sharing”).
My experience certainly aligns with the basic premise in the video, and that’s why I am striving to ensure our business is structured, from the ground-up to ensure alignment with these principles.
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Extrinsic Motivation –vs– Intrinsic Motivation:
The article in the AFR includes some quotes that sum up the nub of the issue:
“… as long as the tasks tested required only a mechanical skill, the rewards worked.
‘The higher the pay, the better the performance’, says Pink. ‘But once the task called for only rudimentary cognitive skill, a larger reward let to poorer performance’.”
And, further into the discussion:
He suggests businesses think more about intrinsic motivations, which is about the desire to do things because we like it, because they are interesting, and because they are part of something more important.
What defines a job we want to do?
It’s (sort of) written into the above, but I prefer the original slide in Pink’s talk that I have stolen for inclusion here:
These three words are discussed more below.
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The flip side
I’ve been around long enough to know that a simple argument (or model) is often not the full picture.
The AFR article provides some balance to Dan Pink’s point of view by quoting Paul Herbert (who is managing director of Incentive Intelligence) as stating:
“… incentive programs improve performance by an average of 22 percent.
He says team-based incentives can improve performance by as much as 44 percent”
This dichotomy is yet another illustration of the statement that “there’s lies, damn lies, and statistics”.
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What does it mean for us?
For a start, let me note my own point of view – that both perspectives are correct, each in their own way.
Extrinsic Motivation
I have certainly worked at (and been demoralised at) organisations that both:
1) Tried to pay me peanuts; and
2) Treated me like a robot.In my experience, both actions seem to come, hand-in-hand (or, to put it another way, an organisation that truly values individuals as human beings will also make the effort to treat them fairly).
We could argue about which came first (i.e. chicken-and-egg) but the reality is that that line of questioning is mostly irrelevant.
Note that this may still result in someone being highly valued, as a person, and yet paid well below what they think they are worth, to the organisation – which might be due to a combination of both:
1) The fact that they are in the wrong role; and/or
2) The fact that they are not delivering as much value (to the client) as they think they are delivering).Either way, a lack of what an individual sees as a fair remuneration can certainly be a distinct disincentive.
Intrinsic Motivation
Once the fair remuneration structure is set up, however, it should no longer be the focus of anyone’s attention.
In two prior articles on this blog, we have highlighted two different mechanisms which (in my view) achieve the same objective:
1) At Di Bella Coffee, they threaten employees with the sack (or fire, for you Americans) for discussing pay details – which is a bit extreme, in my view.
2) At Semco, they take the approach of having a completely open-book approach, which (in my view) would achieve the effect of making pay a non-issue.For us, it is currently not a major (or even really a minor) topic of conversation, though I do want to ensure that our remuneration structure is aligned with the value we deliver to our clients – especially with the changes in roles we’re in the process of implementing.
In my view, the three main points shown by Dan Pink in the slide above are the keys to ensuring that everyone is aligned with the where the company is headed, and hence intrinsically motivated:
Facet 1 = Autonomy
The urge to direct our own lives.
As might be obvious from my personal philosophy, I am expect all employees to work autonomously – either as part of a team, or on their own (as the circumstances of what the client needs/wants dictate).
In my view, the Agile method of software development is better aligned with this facet of intrinsic motivation, and hence is more likely to deliver better results, especially:
1) in an uncertain environment; and
2) with team members pursuing mastery in areas of core value to the team.
Facet 2 = Mastery
The desire to be better, and better, at something that matters
I have previously written about my requirement of employees to develop their own Guru Plans, which are really 10,000-hour projections as to how they can grow into their fullest capability in an area of central importance to our business (and, of course, an area of particular interest to the individual).
Facet 3 = Purpose
The yearning to do what we do in the service of something larger than ourselves
Stephen kicked off some commentary about we, as a company, exist for. It’s not (just) to make money – though obviously we need to maintain a certain level of revenue to allow us to continue.
Though I have been talking about “making the electricity market understandable” for many years, we’re only just beginning to see where, as a company, we should be headed in the longer term.
Note here, that this is with respect to my philosophy of beginning with the end in mind BUT not requiring a detailed map for how we’ll get there.
Importantly, he notes, the focus does not particularly have to be aligned with someone else’s moral code (as exemplified with his example of Phillip Morris). It just has to be a purpose to which all employees/stakeholders are aligned.
Hope this helps to clarify where we are headed…
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Further discussion
For a start, suggest you read this commentary at “Lateral Action”, and follow the links on that page.
[...] 3)
[...] about employee motivation in ways that were slightly different from previous posts (such as this one about Daniel Pink).
[...] During the interview, Daniel Pink is also mentioned.
[...]
[...] I have posted about the greater importance of Intrinsic Motivation before. [...]