For the past two years, in addition to my regular day job, I’ve been researching what it takes for people to make meaningful and purposeful change.
It has been fascinating.
I’ve talked with a number of people about their change journeys. I’ve read countless books and journal articles on change. I’ve been introduced to a number of new insights from neuroscience, motivational theory, behavioral economics and habit formation that, when brought together, can have a huge impact on how people can effectively change. I have identified what I think are six major components that help drive successful change.
I’ve lived this, breathed it, and dreamed it…
I’ve not been able to keep my own change habits going.
At the beginning of the year I had set out to write five pages a week on change (not quite a New Years resolution, but very close). I thought that would be a manageable goal and one that would allow me have enough material for a book on change by the end of the year.
Five pages a week isn’t even a page a day – how hard could that be?
The following is the second of 3 posts from our guest blogger Paul Schoening, President of Plan C. He is bringing a unique perspective on what it takes for a small business to survive. In his first post (here) he talked about the difficulty of starting a business based on passion and how that passion is both good and bad. He discussed how entrepreneurs need to look at building a sustainability plan and not a business plan. In this blog are his next two tips. Over the next few weeks, the final post will outline the final two survival tips. Enjoy!
2. Show me the money: When starting a new business, oftentimes entrepreneurs focus on sales revenue or profit figures to assess how they are doing. I know I did. In fact, we had record sales in our final quarter as a business and yet we couldn’t make it last.
While it is good to be profitable and increase sales – it is absolutely critical to have a positive cash flow! You need to have enough cash flow to give yourself time to get off the ground and pay your ongoing bills. Fast growth and increased sales are great, but this can create a sense of overconfidence that can skew your decision-making especially with early business success. Conversely, when times are challenging and a business owner is under pressure we can easily make rash decisions fueled by emotion, not logic (i.e., “how the hell am I going to pay for this?”).
One example of cash flow issues was custom cabinet seller M&J Kitchens – who had survived the Great Recession even when its revenue from homeowners and builders dropped by more than half in 2009. They weathered the storm. Then, late in 2011, with sales almost 42 percent higher than the prior year, they were unable to pay their bills and owner Drew Davies was forced to shut the 26-year-old company down. What happened? M&J highlights how important cash flow is. The issue was a “cash-flow crisis precipitated by his bank and trading partners, who Davies says, abandoned payment agreements that had been in place for decades.” M&J’s cash inflows were coming in slower and it’s payments still needed to be made. In this instance “M&J had to float their customers—builders, architects, and home remodelers—who had slowed their payments, typically from 30 days to 60 or 90. At the same time, his own suppliers changed agreements that had been in place for decades by cutting credit lines or requiring deposits, which Davies says could tie up between $60,000 and $120,000 per month.” After more than 25 years of business, the company was forced out of business, not because sales were down, but because it couldn’t cover its cash flow.
Source: Businessweek.com February, 2011
What happened to M&J is not atypical. It can happen to all of us. Which is why we need to have cash flow plan. One way of looking at this to think about how much cash is required to make payroll, pay suppliers, and cover other expenses each month – then figure how many months of cash reserve you will need to have if things don’t go smoothly. In my case with the bike business, I usually looked out 3 to 4 months. I should have been looking out 6 to 9 months. Each business is different – so think hard about what a downturn or change in situation would mean to you. How fast do your customers pay? How long can you push out your own payments.
One way to avoid these mistakes is by finding a great accountant or financial consultant and using them to map out a plan for this. Look at ways you can collect money faster by offering discounts for payments early or requiring a deposit. See how you can restructure payments on goods and services that you use. Look at payroll differently – offset high bi-weekly pay by using quarterly or annual bonuses that provide flexibility for you and rewards your employees for great work. If you can’t afford to hire an accountant full-time, there are many firms that you can outsource part of the accounting of the business to or hire in for consulting. The voice of reality (a shrewd accountant) will keep you in check.
3. Double the time you think it will take: Time is a resource that is often underestimated when starting a new adventure. In the passion of developing out this great new idea, we forget about how long things can take. Particularly the little things. You can celebrate that you are the President or CEO of your business and be very happy to have the title. But you are also the janitor, the sales person, marketer and customer service rep. You need time to handle all of these responsibilities, take time to do research and to ensure that you are continuing your education and staying on top of the latest trends and facets of the marketplace.
Here are a few examples of some rough time estimates that an entrepreneurial friend put together for me for some of the things that he does that are not part of his core business.
Accounts payable: 2 hours per week
Accounts receivable: 1 hour per week
Payroll: 1 hour per week
Social Media Outreach: 3 hours per week
Developing marketing campaign: 2 hours per week (varies, but this is an average)
HR: 1 hour a week (up to 8 hours a week when issues arise with employees or when hiring)
Scheduling: 1 hour per week
Responding to sales requests: 1 hour per week
Networking: 2-4 hours per week
Miscellaneous (IT trouble shooting, equipment purchase/repair, responding to solicitations, etc..): 2 hours per week
This totals up to over a day and a half out of the week for work doesn’t even include business development, sales, or anything that has to do with the work that drives value for his customers (granted, he could probably reduce his Social Media Outreach – I mean really, 3 hours on Twitter, Linked-In and Facebook?).
One way to overcome this time crunch is to look at outsourcing some of the functions of your business so you can focus on the areas of which you have immediate control and greatest value-add. This might require you to increase your outflow of cash (which can be troublesome – see #2) but if it can allow you the time to focus on the important things for success, then it is worth it. Another option is to think outside of the “box” and look at creating partnerships and alliance where you can trade services or leverage each others core competencies.
According to the Four-Drive Model the drives to acquire, bond, comprehend, and defend motivate every human being and should all be addressed in the workplace. However, it is critical for managers and leaders to recognize that employees are motivated by the four drives at differing levels. My recent study, which is discussed in the post “New Research on The Four-Drive Theory of Employee Motivation”, revealed that a person’s demographic background effects which of the drives he or she values the most.
This information could have three potentially significant effects on the way managers implement the Four-Drive Model of motivation.
First, managers can use the results from the study to fine-tune motivation techniques in order to best fit the strongest drives of each employee. Workers should be tested to determine which of the drives is most motivating on down to which provides the least motivation. This will allow managers to not only implement all four drives, but to build custom motivation plans based on what drives the employee the most.
Second, managers can find ways to fulfill each of the drives in order to increase motivation. For example, employees who had sought higher education valued the drive to comprehend more than those who had not obtained a college degree. Managers can make note of employees with higher educational levels and ensure that they are given ample opportunity to express ideas, problem-solve, and engage in challenging and meaningful work. Those with a strong drive to acquire should be given recognition and opportunity for advancement. Employees with a strong drive to bond need opportunities to work in teams and collaborate with coworkers, while those with a strong drive to defend need to see fairness and just processes in the workplace. Research has shown that increasing fulfillment in all four drives leads to much higher motivation in the workplace, but if that is focused specifically to what drives the employee the most without disregarding the other three drives, I believe this would have additional positive impacts on motivation.
Finally, managers should have some way to assess employees in relation to how they perceive that each drive is being fulfilled and they are being given enough opportunities to excel in those areas that most strongly motivate them to go the extra mile. Whether through employee questionnaires or informal meetings, it is a critical step to get feedback from employees so that any necessary changes can be made to further increase motivation in the workplace.
Feel free to comment with any questions or feedback.
Ms. Swadley recently completed her thesis titled: Managing Motivation in the Workplace: A Demographic Dissection of the Four Drive Theory. She is currently at Missouri Southern State University. This article is based on the research that she completed in her thesis.
[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 attainableby 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!
Every year people make New Years resolutions. For too many people, those resolutions are too soon forgotten and ignored.
Does that have anything to do with motivation?
To a degree – yes! I believe that it is about how we channel our motivation and keep it going.
I believe that most people are highly motivated to achieve their New Years resolutions whether it focus on weight loss or being a better parent. Just as we are motivated to achieve certain goals at work, and yet often fail. The problem is usually not in the initial stages where everyone is excited about the new resolution or goal (go to a gym in the next week or two and see how crowded it is). The problem occurs when that initial excitement wains, and we fall back into the comfortable and routine. We might try to regain that edge after one or two fall-off the wagon episodes, but pretty soon we tend to just ignore it or forget about it all together.
What we need is to have a motivational engine that keeps us going. We need to fill that motivational engine with the right type of gas and make sure that the engine is tuned up and ready to go. We need to make sure that we have enough gas to refill when it starts running low. We need to know when to get it tuned up and change the oil. We need to make sure that we can fix it when it breaks down.
I think all of our motivational engines are within us. It is the scheduled maintenance and filling it up that we so often lag on. What type of gas do you run on? Is it a personal motivation? Does it require a reward? Is it social? Does it need the turbo power of passion? Is it a mixture of all four?
In order to achieve our goals we need to understand this about us and put elements in place to ensure that we fill our tank regularly and do all the scheduled maintenance required.
What about you – what’s your motivational fuel for 2011?
Ok, this is a little bit of a teaser…we are in the process of doing a major overhaul of how we look at the 4-Drive Model. We’ve talked about the need to update this model before (see here and here). We are underway in getting that developed and should be launching it the first quarter of 2011.
Here is a sneak peak…the four main motivations as we’ve defined them are now renamed and constitute different elements:
1. Personal Motivation- focus on the intrinsic motivators that we have and encompasses the Drive to Challenge & Comprehend
2. Reward Motivation- focus is on the extrinsic motivators that we have and encompasses the Drive to Acquire & Achieve
3. Social Motivation- focus is on the social drives that motivate us and includes the Drive to Bond & Belong
4. Passion Motivation (this name is still being hotly debated – but for now its what we are running with)… – focus is on the motivational element of purpose and passion – including defending one’s honor and tribe
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.
As the hiring outlook improves with anticipation of the new calendar year on the horizon, election dust settling and corporate tax liability gaining clarity, the talent exodus will begin in next few months.
Are you ready?
If your organization has not installed proactive mitigation efforts, you could lose your best talent over the next 2 quarters (in other words, if your not doing something now, you’re going to pay for it later). Successful recession recovery strategy should not ignore the critical variable of having the best talent on-board as well as engaging the “survivors”, lest ye not forget;
“High-commitment organizations outperform low-commitment organizations by 47%”
“Engaged employees are 43% more productive.”
The Hay Group
Our research shows that engaged employees can increase your financial position by almost 200% while disengaged employees can decrease your financial position by almost 25%.
Increasingly we are seeing data that engaged employees drive business success. As the economy recovers at the current snail’s pace, companies are also looking at their employee engagement scores deciding they’d better do something about it now before wholesale exodus occurs by their greatest resource.
Proactive talent managers planned for this factor 3 years ago.
Where are your engagement planning efforts at currently?
Just this week, another study was released by The Brand Union, a brand strategy and design consultancy. This recent study surveyed 680 U.S. professionals revealing emotional engagement outweighs other forms of employee interaction, offering critical insights for executives who want to improve employee engagement health and create business efficiencies during lean times.
We do a lot of work helping improve how teams operate. Some of it is straight old fun team building – you know the type where you go off-site for a day and do different types of games and activities (note – some people love these types of programs and others detest them with a passion). Other programs we do are much more intense and involve really working on specific team issues and developing action plans for greater collaboration, communication, or productivity.
We’ve worked with big teams. We’ve worked with small teams. We’ve done programs for executives and for line-workers. We’ve worked with teams that are working well and just want to get to that next level and teams that really are on their last leg and need immediate urgent care or they will implode.
We have done one hour fun sessions. We’ve created on-going programs that last months and require intensive work by the participants.
Regardless of the type of team development we are doing – it is also part of building a more motivational organization.
The Lantern Group is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.