By Janice Molloy
Daniel H. Pink's latest book, Drive: The Surprising Truth About What Motivates Us (Riverhead Books, 2009), couldn't come at a more apt time. As the outcry over exorbitant bonuses for Wall Street traders and executives rises yet again, Pink has turned to 
science to learn what truly compels people to perform their best. He found that a focus on financial rewards can lead to shortcuts, unethical behavior, and short-term thinking--the kind of attitudes and activities that contributed to the recent global financial crisis.
Research shows that "carrots and sticks" can still play a role in motivating performance of routine tasks that don't demand much creative thinking. But in a work environment that requires innovation, self-direction, and advanced problem-solving skills, external incentives actually undermine people's ability to come up with novel solutions to complex challenges. In addition, Pink notes, "In environments where extrinsic rewards are most salient, many people work only to the point that triggers the reward--and no further."
Pink has found that the key to personal and organizational success in today's context is drawing on people's higher instincts: our drive for "(1) Autonomy--the desire to direct our own lives; (2) Mastery--the urge to get better and better at something that matters; and (3) Purpose--the yearning to do what we do in the service of something larger than ourselves." A genuinely motivating work environment provides adequate and fair compensation; a congenial atmosphere; a sense of autonomy over what, when, how, and with whom people do their work; opportunities to develop mastery; and duties that relate to a larger purpose.
So what practices can, in Pink's words, "strengthen our companies, elevate our lives, and improve the world"? One example he offers is from the Australian software company Atlassian. Once a quarter, engineers are given 24 hours to work on any software problem they want, as long as it isn't part of their regular jobs. The company calls these "FedEx Days," because the goal is to deliver something overnight. The result: Employees have fixed countless long-term software glitches and developed numerous new products.
Google has a similar tradition, in that engineers spend one day a week working on projects that aren't necessarily in their job descriptions. The company reports that half of its new products got their start in the 20% time, including its popular Gmail and AdSense applications.
Online shoe retailer Zappos has injected autonomy into the traditionally rigid, routine work of the call-center employee. Unlike their peers in other businesses, Zappos' workers can use their own discretion in solving customers' problems. They aren't required to follow a script or limit their time with a buyer. As a result, the turnover rate at Zappos is exceptionally low, and its customer-service scores are comparable to those of high-end companies such as the Ritz-Carlton.
Clearly, as Pink reports, "Companies that offer autonomy, sometimes in radical doses, are outperforming their competitors." And that's the bottom line of Drive--by using what research can teach us about human motivation, we can create both more humane and more effective workplaces.
We can also create more ethical ones. When people are driven by intrinsic motivators, they are less likely to cut corners or pursue short-term gains at the expense of long-term value creation. So, how can we get our financial leaders to take these lessons to heart?
Janice Molloy is content director of Pegasus Communications, managing editor of The Systems Thinker newsletter, and program director of the annual Systems Thinking in Action conference.
By Janice Molloy
When economic times are tough, businesses tend to focus on boosting employees' productivity--on accomplishing more with fewer people. With the current high levels of unemployment, some organizations rely on fear of layoffs to "motivate" their workers. Seeking a more positive spin, others may turn to incentives. But as explained by Dan Heath and Chip Heath in "The Curse of Incentives," published in the February 2009 issue of Fast Company, incentives "are effective, irresistible, and almost certain to backfire."
The "Fixes That Backfire" systems archetype (also referred to as "Fixes That Fail") commonly occurs when people think they have solved a problem, only to have it recur with a vengeance later. In their article, Heath and Heath give several examples of how incentives produce their intended effect in the short run while causing serious collateral damage down the road.
For example, NFL quarterback Ken O'Brien was notorious for throwing interceptions. In an effort to boost his performance, one team wrote into his contact a financial penalty for each pick he threw. The provision had its intended effect: O'Brien threw fewer interceptions, not because his accuracy improved, but because he threw far fewer passes than before. Presumably, this lower number of attempts adversely affected his teams' ability to move the ball and, ultimately, score points.
The authors attribute the problem of failing to anticipate the side effects of our policies to something psychologists call a "focusing illusion." Basically, by focusing on one variable--such as interceptions--managers fail to take into account the impact of a particular action on other variables in the system.
So, what light can a systems perspective cast on the incentive trap? Understanding the "Fixes That Backfire" archetype can help us:
- Better define the problem (in this case, the problem wasn't interceptions but not enough completed passes)
- Clarify the goal of any proposed action (improving accuracy)
- Be aware of possible unintended byproducts of policies (when you penalize the quarterback for interceptions, he will throw fewer passes)
- Ensure that we're addressing the underlying problem rather than a symptom (improve the quarterback's accuracy through training, the quality of the receivers, the protection from the offensive line)
- Identify a variety of potential fixes (rather than penalize for interceptions, reward for completions; hire a quarterback coach; reevaluate the game strategy)
- Test actions before, during, and after implementation for counterproductive effects, and
- Measure the impact of your intervention
While taking these steps may be time consuming, the alternative is investing in solutions that don't achieve their intended goals. And that's a game plan that no team can afford to follow.
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