[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!
“The new compensation plan is only as good as the sales representative’s understanding and acceptance of the plan.”
This quote is from the December 2010 issue of World at Work’s Workspan journal. I found it very familiar as we’ve been using the following line in our proposals since 2003 “You can have the best incentive plan in the world, but it doesn’t make a difference if your people don’t understand it or buy into it.”
I believe this with all my heart.
In fact, much of our business is built around this belief. We work with many of our clients creating communications campaigns that drive understanding and help build buy-in to their incentive plans. We tend to think about this in a holistic way with many touch points along the way. We don’t just craft a cool looking brochure and leave it at that. Our ideal process involves upfront analysis with interviews of participants and managers to better understand how the current plan is perceived and used. This analysis also provides us with much needed information as to some of the barriers that we will face in trying to communicate the plan. Then we need to think about how to break through the deluge of information that a typical sales representative is bombarded with. We also work very hard at trying to craft words and visuals that explain the incentive plan in a very easy to understand manner – crafting multiple messages, charts and images. The overall flow needs to be right or the impact is lost. It is important to understand what medium the message is going to be presented in and where it comes in the continuum of communication touch points – is it the first message that is intended to generate excitement in a flash e-mail; the main presentation at the National meeting that needs to show how a sales rep can maximize their payout with this plan; or the detailed plan books that are the legal documents that contain all the minutia that an incentive plan has? We then look at follow-up interviews and focus groups to make sure the message got through and that we didn’t miss anything. Throughout the year we want to communicate to the field using quick reminders and little teasers to keep the plan top of mind.
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.
My four year old son was playing trains downstairs with two of his friends last week. It was going great until one of the friends somehow ended up with 5 train cars while my son only had 4. This sent my four year old into a tizzy in which he stomped out of the room and sulked on the floor in the kitchen.
“He has more than me.” was the response I got when I asked him what was wrong.
So trying to think quickly and forgetting that I was dealing with a four year old, I asked him if he had been having fun playing with four trains before he realized that his friend had five? “Yes…but it’s not fair. He won’t share and he has more.”
My equally “way-too-old” for a four year old response was, “but right now you have none – which is more fun, playing with four or playing with none?” I thought I had him here….
He looked at me with a quizzical stare and held up his hand with all five fingers out – “Five!” he said in response with 100% conviction. Ahh yes, I’m dealing with a four year old mind.
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.
Olivia Mitchell is one of the best experts on the web when it comes to presentations and public speaking.
She gets it.
I have been following her for over a year now and have been constantly amazed at the quality of her posts and her use of research to back up her statements. In this post, she talks about three myths of public speaking – read it and let me know if you don’t change your mind after reading this.
After reading it, I started to think about how these myths often get in the way of effectively communicating incentive and compensation plans to people as well…
Myth #1: It’s not what you say, it’s how you say it
I was walking with my 4-year old child to the park. It’s just a few blocks away, an easy walk for him most days. But not today – he wants to be carried.
“I’m tired.” He says. Huh? He was just gung ho about going.
No matter how I try to get him to continue walking, he won’t. I try to use reason – “it’s just two blocks – you can do that.” I try to encourage – “you’re a big kid now who can do this easily.” I use incentives – “if you walk, we can stay an extra 15 minutes at the park”
It is all to no avail…
Ok. I pick him up and carry him on my shoulders. I carry him until the edge of the playground – and now…
Now he is full of energy. He wants down. He takes off. I can’t catch him. He runs, he slides, he swings and he plays….on and on and on.
So here is my question – do I have a lazy kid or did his motivation just kick in? Was it the proximity effect or was he rested because I carried him? Was I played? In the end it doesn’t matter: he enjoyed the park and I enjoyed watching him.
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