Economics is the study of incentives and how they are pursued. Sometimes a particular set of incentives is so irresistible that people are driven to attain them through unscrupulous behavior. ~ Freakonomics
If economics is the study of incentives, then a large part of human resources is grounded in economics. This explains our elaborate compensation systems, rewards, job design projects and others to motivate our employees. As highlighted in the above quote, misalignment of incentives is often a cause of major organizational problems (undesired or unscrupulous behaviours).
For example, a company that sells canned-corn. A major issue was the number of grasshoppers being missed on the “cleaning” assembly line. The company decided to offer a bonus of $0.05 per grasshopper found over a set quota (based on the average number of grasshoppers found before the bonus). Soon after implementing the new bonus structure, quality assurance noticed an increase in the number of grasshoppers found (despite paying out bonus for employees finding more grasshoppers than quota). As it turns out, employees were having their children catch grasshoppers after work, then dumping them into the assembly line to find. However they were not able to quickly collect back all the grasshoppers, meaning more were in the canned-corn than before.
This highlights a crucial part of any program designed to motivate employees – incentives must motivate and align employees goals with those of the organization.
Now that we are aware of this key fact about alignment of incentives, what incentives work to motivate employees? There are a number of theories, but I like a combination of three theories:
- Frederick Herzberg’s Motivator-Hygiene Theory
- David Rock – Neuroleadership Based Leadership / Coaching
- Dan Pink – author of DRiVE
In the late 1960’s Herzberg developed a theory that there are two types of needs that need to be addressed for employees to be atisfied.
The first group are Motivators such as challenging work, recognition, responsibility that creates internal satisfaction with the job. The second are Hygiene factors such as status, job security, salary and benefits. These do not provide continually motivation, but if they are not acceptable employees will be dissatisfied.
In order for an employee to be satisfied, both Motivators and Hygiene factors need to be acceptable to the employee. a list of these factors, combined with Dan Pink and David Rock’s theories can be found at the end of this post.
I often used Herzberg’s theory as a checklist for managers and hr consultants when they were evaluating satisfaction within divisions. In particular, looking at ensuring hygeine factors were addressed. There is limited benefit to addressing motivators if hygiene factors are broken.
Once assured that the hygiene factors are met, it is time to look at
the motivators. I find, particularly for knowledge workers or
whenever creative problem solving is needed, Daniel Pink’s methods are
excellent. In fact, in some cases they align with the same factors
identified by Herzberg. I’ve included a video summary of Daniel
Pink’s work, although I’m sure many of you are already familiar with it.
The
three keys to Pink’s theory are autonomy, mastery, and purpose.
For employees (or anyone) to be motivated they must have the opportunity
to determine their own best methods (autonomy), the skillset required
(mastery), and they must be tied into the reason it is being done
(purpose). When these are met, they are intrinsic motivators –
separate from extrinsic systems such as recognition and
compensation. Although, in most organizations those are great
supplements to jobs designed to meet Pink’s three motivators.
Lastly, we have David Rocks Neuroscience approach. A key in his approach is that humans have a binary response to stimulus – threat or reward. Rock then discovered 5 fundamental keys that impact this threat-reward response; status, certainty, autonomy, relatedness, and fairness (SCARF). How a situation impacts these drivers determines whether the brain will interpret the situation as a threat or a reward. The first two models (Herzberg and Pink) are great for designing jobs, policies and programs within organizations. Rock’s methods are ideal for evaluating existing programs, and for quality assurance with new programs.
I’ve put together a template below using a combination of these three models as a starting point for anyone tasked with improving motivation within their organization.