Incentive compensation professionals work hard at developing incentive plans that drive employee motivation while also meeting their company’s strategic objectives.
In the past, this has been achieved by using rules of thumb and stringent financial analysis. Yet, hard work is not enough in today’s turbulent times.
In today’s hyper-competitive world, you need an equally competitive advantage to stay ahead.
As sales professional your time and energy should be focused on selling not on trying to decipher the communications you receive from your organization.
Understanding how your incentive and rewards programs work should be easy. Today’s competitive tool for outperforming your goals is better communication.
Your comp plans and rewards may be good, perhaps the best, but if your company is not investing in communication, you often miss out on their true potential.
This article highlights the key learnings from Kurt’s presentation at the “2020 World at Work Spotlight on Sales Conference”. The original slide deck is available below.
In 1937, paleontologist Gustav von Koeningswald was working on the island of Java in Southeast Asia, searching for new evidence of our early human ancestors. To achieve this goal, he needed to find fossils, and the apex of fossils was the skull. With an intact skull, paleontologists are better able to distinguish between ape and human.
But skulls were rarely are found
intact.
Instead, paleontologists needed to piece together a multitude of small skull fragments in a complex 3D puzzle. It was difficult work – difficult to find all the pieces and difficult to fit them together in the right way to reform the original skull.
To help alieve the burden of searching and finding the skull pieces, von Koeningswald enlisted the help of people from the local village. He did this by giving them an incentive. He paid them 10 cents per skull fragment that they delivered to him.
In 1925, four climbers, led by Phil Smith, ventured north from Colorado to Jackson Hole, Wyoming to attempt to climb “The Grand Teton” mountain in the Teton Range.* The Grand had been summited before, but these four climbers were coming at it from a different route, one that had not yet been explored. From the valley floor of Jackson Hole it looked like they would have a relatively straight ascent to the peak.
The four climbers set out with high expectations of being the first to chart this new route. As they progressed up the mountain, it looked like they were getting closer and closer to the summit. One can imagine their feeling that this goal was within easy reach. That is until they came up to the top of what they thought was a ridge. To their dismay, instead of it being another ridge, it was the peak of an entirely different mountain. The Grand was almost a mile away with a sheer 450-foot drop to the saddle between the peaks. The four, not wanting to give up, attempted to rappel down the face of the cliff. They realized that it was too hard and too dangerous, so they gave up and headed back to Jackson Hole.
Before they left, they named this new summit point, Disappointment Peak.
It is not only climbers who run into disappointment peaks. We often fall victim to this same dismay when we realize that the goal that we had set out to achieve is harder, will take longer, requires more resources or effort than we first envisioned.
Often, we too give up.
Our illusions
The four mountaineers had fallen victim to an optical illusion of the Grand. When standing in the Jackson Hole valley if you look directly at the mountain, it seems as if Disappointment Peak is just part of the Grand. The two peaks appear to be one and the same (see image).
One of the elements of successful change is being able to anticipate how you are going to achieve that change. We like to plot out the steps that we need to make in order to reach our goal.
The problem comes in when we encounter our own mental illusions – when we think that the goal is much closer or easier than it really is.
One thing that both psychology and behavioral economics have shown us is that as humans, we are really good at self-deception. We have a number of innate biases that affect our belief formation and influence our thinking – from confirmation biases, base rate fallacies, availability heuristics, gambler’s fallacies, control illusion, and my favorite, the Dunning-Kruger effect (The tendency for unskilled individuals to overestimate their own ability).
Generally, we are overconfident in our abilities and underappreciate the difficulty that is required to achieve change.
These mental illusions set us up.
When our expectations of what this goal is going to cost us in terms of time, effort, energy, and resources does not match with reality and when we realize the summit is much further away than we thought – we become disappointed as well.
We are doing great on our diet and losing weight weekly until we hit that plateau and can’t seem to lose those last 15 pounds.
The first three chapters of the book flowed smoothly, but we now are encountering writers block and can’t even complete the first paragraph of the fourth chapter.
We stopped smoking for five weeks until that project at work stressed us out and we needed something to calm our nerves.
We had achieved our goal of making ten cold calls a day for the two weeks but felt dejected that we had not had one sale from those encounters.
Moreover, just like Phil Smith and his companions, we can see the peak in the distance, but can’t seem to rappel down that cliff that is between us and the summit.
Three things to do when you reach your disappointment peak
We cannot always find a way to keep trekking on and reach our goals, but here are a few things to try:
Step back and look for new routes.
Over the years we have conducted a team building event called the electronic maze (see 5 lessons from the maze). Envision a giant chess board comprised of 54 squares, where some squares beep and others do not, and teams are trying to get from one side to the other stepping only on non-beeping squares.
At one point in their journey through the maze, people tend to get stuck and keep running into beeping squares as they move forward to the other side. The path goes backward here – but EVERY TEAM we have ever worked with has repeatedly stepped on one or more of the “beeping” squares that are in front of them. Even after repeated failed attempts stepping on the same beeping squares over and over, they cannot fathom that if they just take a step backward, they will ultimately move forward.
Sometimes we just need to look around and see if there is a different path to our goal.
Find new tools/knowledge.
Do you have the right equipment to overcome your obstacles? Phil and his team attempted to rappel down the cliff and felt it too dangerous. Today, many climbers specifically go to climb and rappel down that very cliff. The equipment and knowledge that people have today are much better than what they had 90 years ago. Are there new or different tools that you could use to overcome your road block? Would additional knowledge help you in continuing your journey?
Push on through.
Sometimes we just have to grit our teeth and power on through. As Dory says, “Just keep swimming. Just keep swimming.” There are many times when we reach a point of dismay and our mental energy and enthusiasm collapse because it is going to be longer or harder than we thought.
If the goal is important, then sometimes the best solution is to continue to trudge on. We can think of this as applying Newton’s first law of motion, “An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.” (NASA.com) Our movement towards the goal has stopped, so we need to apply an unbalanced force upon it to get it moving again.
Plan ahead for obstacles.
Just because our mental illusions often trick us, does not mean that we will always be fooled by them. Before beginning our journey, we can carefully map out the process and try to visualize what potential roadblocks we could encounter. That process helps prepare us for when we do run into an issue. In other words, we have primed ourselves and our expectations so that dismay will not fully knock us off our course. Specifically, we should be asking ourselves:
What might happen that could derail the journey
What are external forces that could impact this process
What are internal forces that could affect this process
If we run into one of these obstacles, how will we approach it (“If ________ happens, then we will do __________.”)
We should also tap into our social networks and see if other people we know gone through this process or attempted this change. These people can be our mentors and help work through with us some of the unforeseen obstacles that we had not thought about. Their experience and knowledge can not only help identify potential barriers and how to overcome them but also might point us on a route that avoids those obstacles altogether.
Reexamine your goal.
Lastly, reexamine your goal. Is it worth the effort, time and trouble that it will now take you to achieve? If it is, keep going for it. But don’t just blindly go on just because you started. Climbers too often focus on reaching the summit at peril to their own lives. Ed Viesturs, renowned mountaineer and bestselling author who’s summited Everest seven times says, “I’ve always had this motto that climbing has to be a round trip. I’ve always understood that getting off the mountain was more important than getting to the top…It’s OK. It’s not a failure…If you’re rushing, if you’re thinking it has to happen today, then you’re going to make bad decisions.” (Time.com) Sometimes it is ok to stop and say, not today. I’ll try this some other time when conditions are better, or I’m in a better spot.
*A common mistake is for people to call the Teton Range “The Grand Tetons.” The Grand Teton is a single mountain while the mountain range’s proper name is “the Tetons” or “the Teton range.”
**Thanks to Michael Anschel for introducing me to the story of Disappointment Peak.
Driving home from a wedding on January 2nd 2016, my wife was looking at her Facebook feed on her iPhone and made a little exclamation, “Wow!”
Of course that made me curious, so I said, “what was that for?”
“An old colleague of mine just posted that she walked 10,000 steps every single day last year.” she stated.
Now I was really curious, “Can you get me an interview with her!”
Fast forward a month and half and I sat down with Janelle at a coffee shop on the campus of the University of Minnesota where she worked. For the next 60+ minutes I was enthralled listening to her story and asking a ton of questions.
“How did you do it?” “What was your motivation?” “How were you supported?” “What was the hardest part?” “Why?” “What insight can you give to people who want to achieve something like this?”
Some facts first:
Total steps in 2015: 6,456,950 (that is 6 million, 456 thousand, nine hundred and fifty) totalling 2,818 miles walked.
May 2015 was her most active month with an average of 21,388 steps per day and her most active single day of 80,606 steps.
Dang – that’s impressive!
February 2015 was her least active month with an average of 14,190 steps and her single lowest step count on any day was 10,016 (just 16 steps over her goal) on January 16th, 2015.
Walking 10,000 steps everyday is not easy nor is it a task that you can do by just forming a new walking habit.
It takes concentrated effort and dedication. It requires that you have an emotional commitment to achieving your goal. It takes support from friends and family and sometimes even strangers. It takes coming up with hacks to motivation to keep that fire going all year long.
In my interview, I wanted to find out if Janelle employed any of the six actions that I’ve identified as being key to successful change (see here) and (here). When I asked her about how she did it, she used all six to some extent: Engaging her emotions, Plotting her progress, socializing her support, harnessing her habits, enabling her environment, and preparing her plan to overcome obstacles.
Janelle engaged her emotions.
One of the key concepts from the change work that we’ve done, is that purposeful change is more likely to succeed if you actively engage your emotions.
Rational change, we found, is not sustainable. However, emotions are hard to consciously activate.
We’ve found that one way to hack into those emotions, is to align your change with your self-identity. If you can align your change behaviors with who you perceive yourself to be, then your behaviors become easier, and when you behave in ways not aligned with that self-perception, you feel angst to come back into alignment.
When your behaviors and self-perception don’t match it creates a sense of cognitive dissonance – a pull to change something to get the image and perception back in alignment
Within the first five minutes of the interview, without prompting, Janelle stated, she identified herself as a “walker”. She talked about how she always liked to walk, how she walked with her mother when she was younger, that when she walked, she felt better. In her mind, she identified who she was as a “walker” and that implied that she behaved in certain ways (walk instead of drive when possible, take the stairs – not the elevator, etc…).
By identifying herself as a walker, she was emotionally invested in those behaviors. It made it easier to do them and harder to not do them. Here is a picture from her Facebook page (Minnesotan’s will recognize the famous Walker Art Museum):
Janelle plotted her progress.
Plotting ones progress towards a goal is important. Research has shown that progress, no matter how small or insignificant, provides humans with great satisfaction. We know from behavioral economics that the closer you get to a goal, the more motivated you are to achieve it (see here).
Of course Janelle had her fitbit to track her steps…but that wasn’t all – she had her calendar. Janelle had gone online and bought a special full year calendar (from Europe), had it shipped over and framed. This was hung in her home office where she saw it every day.
Each day that she walked 10,000 steps, she added a sticker to that calendar. Different colors represented different step counts. Yellow was 10K, blue was 15K, and red was 20K.
One interesting side note, was the amount of stickers she had actually added to her motivation. Here is how she describes it:
“In November and December I gained some motivation by the fact that I was running out of yellows and eventually blues. So, I had to walk more to get to the 20K level (red).”
She also set up motivational milestones. She created a “walk wish-list” of different places or walks that she wanted to do. She posted these to her Facebook page (adding a social element that we will talk about later). When she achieved these walks, she was able to check them off her wish list.
Additionally, Janelle joined a fitbit group (again, we will talk more about the social aspect of this in a bit) that had different walking challenges. Fitbit calls these challenges, “a fun way to help you stay motivated by competing with friends and family.” These mini-challenges helped provide ongoing ways to measure her progress.
Her fitbit group also had a leaderboard that showed her daily steps compared to those in the group. This was a way to track her progress not only against her goal, but as part of a fun competition against others.
Janelle socialized her support.
When she decided to commit to her 10,000 steps a day for a year challenge, she purposely posted her decision on her Facebook page. She told me that she did this to create accountability. By publicly stating her intentions, she enlisted her Facebook friends to become part of her social support team and keep her on task.
We often feel more pressure to do things for other people than we do for ourselves. I call this “other focused motivation.” For some people, this motivation is much stronger than the motivation that they have to complete things for themselves.
For the past 20 years, I have been exploring how people change their behavior. This exploration has led me down many different paths and lines of inquiry. One of the most fascinating areas of research that I’ve investigated surrounds the now hot topic of behavioral economics.
I often describe behavioral economics as the “fusion of psychology and economics in order to gain a better understanding of human behavior and decision making.”
So what do we find out when we fuse psychology and economics together?
“Humans often act in very irrational ways.”
Now that is not ground breaking news for most of us. Even when I graduated with an economics degree, I knew that people didn’t always act in rational ways – or at least I didn’t (otherwise why would I stay up watching bad T.V. until 2:30 AM when I knew I had to get up by 7:00 AM for a meeting or why would I spend a hundred dollars on a dinner out but fret over buying a steak that was over $10 at the grocery store?).
However, for many economists, that statement was hearsay. Many economic models are based on the fact that people act in rational ways to maximize their own utility (i.e., happiness). These theories stated that we might make irrational choices in the short-term, or when we don’t have enough information, or that at least your irrational behavior would be vastly different than mine so that on average, we would be rational.
The truth discovered by behavioral economics is that is not often the case. We don’t act rationally – in fact, we sometimes act exactly opposite of how an economist would think we should act.
For example, research has shown that we will judge the value of an unknown item using totally irrelevant data to help us in that decision. Dan Ariely ran a wonderful study where he asked people to bid on a wireless keyboard (something that they were not very familiar with at the time), but before they answered, they had to write down the last two digits of their social security number (a totally irrelevant piece of data). The results of the bid were fascinating (top 20% being SSN that ended in 80 or above, the bottom 20% being SSN that ended in 20 or below):
This is a significant difference in how much they bid – entirely based on the last two digits of the SSN.
Here’s another one.
Would you work harder for a set amount (say $10) or for an uncertain amount (say 50% chance of $10 or 50% chance of $5)? Most rational people would say that they would work harder for the guaranteed payout of $10…that isn’t the case.
In a study that looked at drinking a large amount of water in two minutes – some people were offered a $2 fixed amount for finishing it – the other group was told they would earn either $1 or $2 (random chance of either). So what was the result?
43% completion rate for the certain award versus 70% completion rate for the variable? Not what you would think right?
Note – that this doesn’t apply to people choosing to participate – existing research suggests that we prefer certainty over uncertainty when deciding if we should opt-in for a goal. However, uncertainty is more powerful in boosting motivation en-route to a goal.
So what does any of this have to do with change?
We so often want to drive change in ourselves or our organizations and think through the process of this – in a rational and systematic manner. I’ve worked with companies who are baffled that they don’t see a long-term increase in employee productivity and satisfaction after they increase their wage (Hedonic Treadmill Effect). I know people who have mapped out their exercise routine for the next day, only to hit the snooze button instead of getting up and going for their morning run (Hyperbolic Discounting).
Too often we try to implement a change program based on a belief that we are rational beings.
Behavioral economics highlights that this just isn’t the case.
The Vail Centre (formerly the Vail Institute) is a great organization that is exploring the boundaries of how people lead and understanding what it takes to make a difference in the world. I am honored to be on their advisory board and working with them on some cool new projects.
FYI – I have a son and a daughter – not two daughters as it states in the article…I’m sure my son would appreciate my clarification on that.
Much of the work that I’ve done in the past has been on how the 4-Drive Model impacts employee motivation. The research that we did as well as the work that we implemented, focused mostly on large scale initiatives / programs that helped to satisfy these different drives (sales incentives, contests, recognition programs, award trips, performance management systems, etc..). Recently, I’ve been asked to develop some workshops, using the 4-Drive Model as the foundation, but that focus on helping managers better engage their employees – at a local level.
Putting these workshops together has been fascinating because it takes the 4-Drive Model to a much more specific place. Working one-on-one with an employee to help them feel more engaged at work. Even after 6 years of working with this model, I’ve identified a few new key pieces.
1. We all know that different people have different motivational profiles – but we’ve found that individuals motivational profiles can change very quickly (unlike someone’s personality profile – which changes little over time). Motivation, we found, is very context dependent. This is an important aspect when thinking about engagement.
2. Team environments within a larger organization are more important than any large scale initiative. Again, this is not ground breaking, but it does go to how team cultures are created or destroyed. One key piece that I’ve recognized, is that one bad-apple, can have an overly large negative effect on overall engagement of the team. In the past, I would have suggested working with that person to help develop them and coach them to improve – now I recommend that managers get rid of them as quickly as possible once they are recognized. It sounds harsh, but those individuals can poison the entire team to a point that makes it very hard to recover.
3. Most managers are too busy to focus on engagement. They have a hard enough time getting all of the work done that they are tasked to do – much less spend time thinking about how they can or should engage their employees. They often are so busy that they don’t stop to look around at what their employees are doing or saying. It is important to help them focus a portion of their energy on understanding what makes their team tick.
4. Most managers have not developed the skills and knowledge needed to effectively engage their employees. Some managers are naturally talented in this, like the sports phenom who at 18 possesses all skills necessary to be at the professional level. Most managers are on the JV team (if they even make the team). They need the coaching and time to develop their skills. Engagement is not hard, it just takes time and effort.
5. Probably the number one issue that managers have is that they don’t know what to focus on to increase engagement. Is it purely recognition, is it collaboration, is it tying to the larger purpose, is it compensation? This is where the 4-Drive Model really helps and can provide some guidance for managers and a way to understand their team.
Let me know your thoughts on this and any examples you’ve seen of good or poor management with regards to engagement.
Last week I wrote about how I have not kept up on my own goal of writing a book on achieving goals (i.e., change).
Ironic?
Yes…very ironic.
As mentioned, over the past two years I’ve been researching how people change. That research indicates that there are six major components that help people achieve purposeful change.
In reviewing my own lapsed change goal of writing five pages a week, I found that I had only leveraged two of those six components. Doing the math, that means that I was not doing four of the six. Those were:
1. Writing was not an emotionally driven goal – it was a rational goal
2. I had not established a habit around writing
3. I had not changed my environment to help facilitate my writing
4. I did not have social support network set up to help me
Last week I identified two of those six as easy fixes, one as moderately easy and one as very difficult. Here is my work to date on those:
My easy fixes (weren’t so easy):
4. Social support network. In response to this, I talked to my wife and asked her to help me on this by holding me accountable. She refused.
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…
And yet…
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?