Tag: Dan Pink

Repost: Expanding on Dan Pink – How to Drive Employee Motivation

Carrot - reaching for

[This article was first published in September of 2009]

It has been interesting how much attention has been paid to Dan Pink’s latest message on motivation that was presented at TED.  The number of tweets, blogs, and other messages about this have been huge.  We ourselves highlighted the speech here on this blog a couple of weeks ago (http://wp.me/pypb9-31 ).

What I find interesting and a little worrisome, is the idea that many are taking from Dan’s presentation that all incentives (or at least most) are bad.  I disagree 100% with that concept.   I would like to expand the conversation to explore why.

The debate about intrinsic vs extrinsic motivation has been going on for a long time.  The candle experiment presented by Pink was done in the 1950’s.  Deci & Ryan research from 1970’s and 1980’s suggested that extrinsic rewards can decrease intrinsic motivation.  Alfie Kohn wrote about how he thought extrinsic rewards were bad in “Punished by Rewards” in the 1990’s.   All of this research suggested a negative correlation between extrinsic rewards and intrinsic motivation.

However, that is not the only research out there!  Research based on both real life corporate performance data and academic experiments show a different side to this debate.

First, performance data from a number of sources points to an increase in performance when incentives are used.  Stajkovic and Luthans’ meta-analysis of 72 contingent based behavior programs found that money incentives increased performance by 23%, social recognition increased performance by 17%, and feedback increased performance by 10%.   BI, a performance improvement company, has shown increases of over 300% between a control group and an incentivized group in sales performance.

Those are hard numbers to ignore!

Also, Paul Hebert does a nice job of highlighting research by the International Society for Performance Improvement that indicate a 22% increase in performance for individual incentives and 44% for team based incentives – (see it here http://tiny.cc/nHfAj –  he also discusses some other arguments around Dan Pink’s message).

Second researchers have found that the way that incentives are structured has a significant impact on their performance as well as on the impact they have on intrinsic motivation.   Work by Eisenberger, Cameron and Pierce show that extrinsic rewards, if structured correctly, can actually increase intrinsic reward. They state, “The findings suggest that reward procedures requiring ill-defined or minimal performance convey task triviality, hereby decreasing intrinsic motivation. Reward procedures requiring specific high task performance convey a task’s personal or social significance, increasing intrinsic motivation.”  Specific to creativity, Eisenberger and Cameron “concluded that decremental effects of reward on intrinsic task interest occur under highly restricted, easily avoidable conditions and that positive effects of reward on generalized creativity are readily attainable by using procedures derived from behavior theory” [emphasis added].  Yet Dan Pink does not reference any of their work in his book (see here for some research articles that point to how extrinsic rewards can increase creativity: Eisenberger, Armeli, and Pretz, Eisenberger and Rhoades, and Eisenberger, Cameron and Pierce)

In our own work, we’ve seen that when individuals are given a choice in choosing levels of goals and subsequent rewards, they have an increased motivation to choose (and achieve) higher goals than what management would have given them.

That being said, Dan Pink has gotten the discussion flowing on this – which I think is very good.  He has also highlighted the fact that most organizations only see one lever to pull when trying to impact employee motivation – i.e. pay systems. As he points out, there are other aspects that influence employee’s motivation.  This is vital.  To improve performance, creativity, and accountability businesses need to look at more than just rewards!  I hope that this will help expand the use of other motivators!

Dan talks about Autonomy, Mastery and Purpose – these fit right into the Four Drive Model of Employee Motivation.  Autonomy and Mastery align with our Drive to Challenge and Comprehend, while purpose fit nicely with the Drive to Defend.  What Dan leaves out is the power that the Drive to Bond has on motivating employees.

Overall, I think the discussion that will result from Dan’s presentation is great, I just hope that it doesn’t get boiled down to the simple sound bite that “incentives are bad.”

UPDATE APRIL 1, 2011

Let’s start with the positive: Dan’s book has done very well and has helped focus people on the the need for looking beyond the pay system to help drive motivation throughout the business.  This is a very, very positive impact.

Now for the bad: the mantra that “incentives are bad” has been one of the larger themes to arise from the success of his book.  This is not a positive impact.   It has led to a number of non-experts jumping on the bandwagon expounding their personal belief that all pay-for-performance measures should be gotten rid of.  That incentives themselves are bad.  And that people will be 100% fully motivated if we can just figure out how to make jobs more autonomous, provide mastery and have a purpose.  Of course, this doesn’t really account for a lot of what really happens in the world as we know it.

Moving forward, I would like to propose that the discussion around this topic is good – as long as we look at all the research and at how incentives should / should not be used.  We need to look at all the tools in our tool belt – that includes things such as Mastery, Autonomy and Purpose – but also includes other things like rewards.

Let me know your thoughts – click on the comment section below!

Kurt

Repost: We are NOT rational beings so why do we try to make rational incentive programs?

Take the blndfolds offTake off our rational blindfolds…

Dan Airely, Richard Thaley, Cass Sunstein, Daniel Kahneman, Ran Kivitz, and many more psychology and behavioral economics  researchers have shown that while we like to think of ourselves as rational, thinking human beings who are out to optimize our well being, we aren’t.

In fact, we are very far from it.

Sharon Begley at Newsweek wrote this interesting blog “The Limits of Reason” in it, she states, “But as psychologists have been documenting since the 1960s, humans are really, really bad at reasoning. It’s not just that we follow our emotions so often, in contexts from voting to ethics. No, even when we intend to deploy the full force of our rational faculties, we are often as ineffectual as eunuchs at an orgy.”

We see this all the time.  I wrote about it in my earlier post from today “5 Lessons from the Maze.”  We tend to act and behave in very non-rational ways.  There are lots of irrational types of behavior and thinking and lots of theory’s about them (i.e., Loss Aversion, Status Quo Bias, Gambler’s Fallacy, Hedonistic Bias, Anchoring, Reciprocity, Inequity Aversion, etc…).

Here is what is interesting – we tend to still design our incentive programs and our motivational strategies based on believing that people act in a rational manner. We create programs that have 10 different ways to earn, with multipliers, qualifiers, and ratchet effects.  We create programs with multiple components and factors that we think will drive specific behaviors and elicit particular performance results.  We believe we know what people want and use only extrinsic rewards to drive our results.

Ouch!

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Rethinking the 4-Drive Model of Employee Motivation

I have been touting the 4-Drive Model of Employee Motivation since I first read the 2008 Harvard Business Review article “Employee Motivation: A Powerful New Model” by  Nohria, , Groysberg, and Lee.   It is a powerful theory on human motivation in general, and in particular, employee motivation.  First presented in the 2002 book, “Driven: How Human Nature Shapes Our Choices” by Lawrence and Nohria, the model outlines four main drives of motivation.

At the Lantern Group, we’ve been working with this model for almost three years now.  We’ve posted on it several times in this blog (see 4-Drive Model here, Impact on Leaders here, and other info here, here, here, here and here for just a few examples).

It’s  good – but not perfect.

Right away we realized that it needed to be tweaked.

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Sales Motivation using the 4-Drive Model

Salespeople who are engaged in their roles, who are motivated to succeed, and who’s goals are aligned with the organizational goals have been shown to have a significant impact on helping an organization succeed (Badovick, Hadaway, & Kaminski, 1992). Successful organizations understand this and try to keep their sales employees motivated and engaged through a variety of motivational methods – mostly involving extrinsic rewards.

While much has been much written about how extrinsic rewards may have a detrimental effect of on a sales person’s intrinsic motivation (Deci & Ryan, Kohn, or Pink – note: there is also a lot of research on how this extrinsic/intrinsic effect can be mitigated) there is little disagreement on the short-term impact that extrinsic rewards can have on a company’s performance . The short-term benefit of extrinsic rewards assures us that these rewards will be used in businesses no matter what Dan Pink has to say on the topic.   However, this does not mean that these types of programs can’t be improved.

Successful organizations and leaders of the future not only need to focus on the optimization of extrinsic reward programs but also on moving other levers within the organization that can drive sales motivation.  Using the Four-Drive Model of Employee Motivation (Lawrence and Nohria, 2002) provides a clear framework for how to do this.

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Let’s get sales incentives right

Salespeople who are engaged in their roles, who are motivated to succeed, and who’s goals are aligned with the organizational goals have been shown to have a significant impact on helping an organization succeed (Badovick, Hadaway, & Kaminski, 1992). Successful organizations understand this and try to keep their sales employees motivated and engaged through a variety of motivational methods – mostly involving extrinsic rewards. While much has been much written about how extrinsic rewards may have a detrimental effect of on a sales person’s intrinsic motivation (Deci & Ryan, Kohn, or Pink) there is little disagreement on the short-term impact that extrinsic rewards can have on a company’s performance. The short-term benefit of extrinsic rewards assures us that these rewards will be used in businesses no matter what Alfie Kohn or Dan Pink has to say on the topic.

It is important then that we get sales incentives right.  We need to ensure that as leaders, we are not limited in our thinking about how we can structure sales incentives and how they operate.   We must look at optimizing how our incentive plans are designed, the type of reward that is offered, and how goals are set.

Extrinsic Reward Program Structure

There is a very clear framework, based on the research that suggests that extrinsic reward programs should be designed such that the rewards are contingent on achieving increasing performance goals.  By doing this, companies not only limit the negative impact that extrinsic rewards can have an intrinsic motivation, they also increase the actual performance that extrinsic rewards drive.  This means that the use of non-contingent incentive rewards should be limited.  It means that incentive plans that are strictly “do this – get that” are not optimal.  Contests that rank people against one another also are not optimal as they only provide feedback that the sales person did better than the others – not against a goal.

Extrinsic Reward Type

The typical reward for performance is usually cash.  When surveyed, over 70% of sales people indicate that they would prefer cash.  However, there have been studies that show non-cash rewards (i.e., trips, merchandise) have a bigger impact on performance than cash alone.  This does not mean that one would replace their annual sales incentive programs cash bonus with rewards of trips and tv’s – but it does mean there should probably be a mix.  It should also be noted, that sometimes extrinsic rewards are based on fulfilling the drive for Achievement and as such, do not require significant outlays of dollars – recognition of performance by senior leaders can be a significant motivator for sales people.

Goal Setting

A majority of sales incentive plans have goals that are provided to individuals.  Goals are good – they have been shown to increase performance across a myriad of environments (see Locke and Lathum).  However, we’ve seen significant backlash against goals when they are not understood or felt to be so out of reach as to be laughable.  The negative impact of this can outweigh any positive motivation that you get from the incentives.  Goals must be understood and bought into (i.e., perceived as fair) to be effective.  There are a number of ways that companies can do this, but they often require changing systems and processes that have been in place for years.  The key is to get the setting of individual sales goals to be as close to the sales representatives as possible, while still ensuring that they align with the company sales objectives.  The science (or art) of this can be very daunting – but trust me, I’ve seen it done.  One simple way to help is to provide a means for front-level managers to effectively shift quota from one territory to another but provide mechanisms to ensure fairness.

Of course extrinsic rewards are just one piece of the motivational puzzle and shouldn’t be used as the only lever to drive motivation and engagement.  The key is to ensure that the incentives are right and that they do not detract from the other methods of motivation.

Intrinsic versus Extrinsic is the wrong discussion

There has been a significant amount of research on the merits of intrinsic versus extrinsic motivation (see Eisenberger, Deci, Ryan, Locke, Latham, Kohn, and now Dan Pink…).  Both sides of the controversy claim that their favored motivational drive is best.  In my opinion, they are both barking up the wrong tree.

It has been shown empirically that both types of motivation drive behavior.   In the real world, both extrinsic and intrinsic motivations are utilized in almost all work situations.  I don’t know of any work place that doesn’t provide employees with some type of pay and most have some sort of variable pay.  I also don’t know of a workplace where there isn’t a focus on (or at least lip service to) improving how jobs are structured for greater engagement or how leaders can inspire their employees.  However, the real discussion should be on how to leverage both forms of motivation to get the behavior change that is needed.

The main issue in this debate focuses around the general impact that extrinsic reward has on intrinsic motivation. Both sides of the debate admit that in certain circumstances extrinsic rewards can either have a detrimental or positive impact on intrinsic motivation.  The issue that businesses face is how to create incentives that not only drive immediate performance but also have a positive influence on intrinsic motivation.  The discussion needs to be not on an either/or type scenario, but on how do we leverage the power of both.

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We are not rational beings…

Dan Ariely brings us research that highlights how we don’t always understand what it is that drives us or motivates us. If you haven’t read his book, “Predictably Irrational” I highly recommend it – go out and buy it now! I think the real insight here is how we as humans tend to believe that we are in control of our own behavior – that we choose our decisions based on rational decision criteria. As you will see in this clip, Dan shows how off we are.

This is important for us thinking about employee motivation because of the implications it raises. For instance, while I think it is important to ask people what it is that motivates them, we have to take the answers they give with a grain of salt – because they don’t always know. As I stated in an earlier post, we need to look beyond their answers and get at the underlying drives that move them. As with Dan Pink’s video, the power of this clip is in how it makes us re-examine what we think we already know. Enjoy!

More Pay ≠ More Motivation

How do you increase employee motivation? For many companies, it appears that they think it is done by just changing their reward systems. In their worldview, “more money equals more motivation.” I had one Regional Sales Manager tell me in an interview, “…if I could just get more dollars down to my reps, they would be fully motivated.” It often seems that companies view their pay plans as the only lever they have to use to impact employee motivation. This simply isn’t true.

Dan Pink, in the TED presentation he gave in July of 2009 (see post below), highlights some of the fallacies that focusing only on the pay plan can have. We agree with a lot of what he says. We know that pay is a vital part of a comprehensive motivational strategy but that there is more to motivation than just pay. Using the four-drive model we understand that there are other levers that can be used to improve performance. Companies need to expand their thinking and look at how they are creating cultures that improve employee’s ability to bond with their co-workers, managers and customers. Leader’s need to structure work so that employees are challenged and that they have an opportunity to learn and grow. Organizations cultures need to be enhanced so that workers feel like they belong to something worth defending.

However, we must also think about pay. The drive to acquire is a strong motivational force. I don’t know of many people that would do their jobs for free (however, I’m sure there are a few out there). I also know that most people would consider leaving a job they loved if they were offered enough money to go to a different job. That being said, more money in and by itself is not enough to drive significantly more motivation in the long run. Pay needs to be structured so that it is fair, it provides guidance around what the organization values (i.e., incentive pay focused on revenue is very different than one focused on market share), provide feedback to the individual about their performance, and allow the opportunity to satisfy the drive to acquire.

Much of Dan Pinks presentation (I’m anxiously waiting for his book) points to the negative aspects that incentives can have on creativity and intrinsic motivation. This is true. The alternative can also be true. Work by Eisenberger and Rhoades (2001) concluded that “how” the extrinsic reward is perceived by the participants has a significant impact on the effect it has on motivation. They found that when extrinsic rewards are designed to reward improvement or quality aspects of their work, their creativity improved. The important part then is not that incentive pay (or pay in general) is bad, but how it is structured and perceived needs to be well thought out to ensure that you are driving the right behaviors.

Kurt

Four Drive Model: New Theory on Employee Motivation

The Four Drive Model of Employee Motivation was presented by Lawrence and Nohria in 2002. The model is a holistic way of looking at employee motivation beyond the typical “pay” model that is prevalent in the corporate world today. I will not go into detail regarding the model here, but just give  an overview and how this model presents a new way of thinking for organizational leaders (see here for how leader’s can impact performance using it).

The Four Drive theory is based on research that shows four underlying drives – the drive to Acquire & Achieve, to Bond & Belong, to be Challenged & Comprehend and to Define & Defend.

Each of these drives are important if we are to understand employee motivation. While companies typically focus on the drive to Acquire & Achieve (i.e., base pay, incentives, etc…), the other three drives play an integral part in  fully motivating employees. Thus, the new theory provides a model for employers to look at when they are trying to find ways to increase employee engagement and motivation.

For instance, companies often pay lip service to team building as they don’t see how it really impacts performance. The Four Drive model shows that team building relates directly to the drive to Bond & Belong – which in turn can influence an employees motivation. Thus conducting a team building session should no longer be just about having fun for a few hours, it should help a company’s employees positively build and enhance the bonds they have with their co-workers.

The drive to be Challenged & Comprehend  highlights the fact that we perform better when we are not bored or “not challenged” and learning on the job.  Instead of trying to automate and simplify all work, leaders should look at how they can enhance or create challenges for employees and provide them opportunities to learn and grow.  With this in mind, organizations must look at how they are structuring their jobs, their projects, their incentives.

Organizations do not typically think of the drive to Define & Defend when they are thinking about motivation. The Four Drive model indicates that a company’s reputation, its moral bearing, the culture and what it does can all be significant factors in how motivated employees are. Think of the different motivation an employee would have working for a pharmaceutical company that is providing life saving medicines for people or a one that is out to maximize shareholder returns. Which do you think would have the more motivated workforce?

Note: Alright, a theory that is almost seven years old really isn’t new, but theories moving from academics into the real world often require a much longer time to be accepted – so I’d give this a good grade! For more information, please go to www.lanterngroup.com or www.prlawrence.com

A LOOK BACK AFTER ONE YEAR –  6-11-10

We have done much work on increasing our understanding of the 4-Drive Model of Employee Motivation over the past year.  We are in the final stages of development for a 4-Drive Assessment that will help people understand how the four drives influence their individual motivation.  Another area of research for us was to look at how managers can use the 4-Drive Model to create programs, put in place systems, and change their behavior to increase their employee’s motivation.  All of this work has helped solidify our understanding of the 4-Drive Model and reconfirmed our belief that this is a very powerful employee motivation model.  We now understand that using this as an underlying architecture for creating a motivational workplace can be very beneficial for organizations.

Our work in this area has also shown that there are some weaknesses to the model.  For instance, “Purpose” isn’t really addressed in the model.  Purpose has been shown to be a key motivator in individuals – highlighted in Pink’s recent work but dating back to research done by Deci, Eisenberger, Locke, Lathum and most importantly Leider.  In the 4-Drive Model we have been forced to put passion under the Define & Defend Drive – but that stretches the current definition for that drive.  We are currently working on a way to integrate Purpose into the 4-Drive Model.

All in all, we still believe that the 4-Drive Model is one of the strongest and most robust models to help understand employee motivation and engagement.  We are working on developing more actionable tools and programs so that managers can both understand the model and be able to use it to increase their employee’s motivation.  It is with great anticipation that we are looking forward to the next year and taking this to the next level.

12/15/10

Please see Rethinking the 4-Drive Model of Employee Motivation for further thoughts on this model and how our thinking has led to new ideas.  Here are some other links to blogs we’ve written about the 4-drives Impact on Leaders here, and other four-drive info here, here, here, here and here.

Kurt

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