Incentivizing Staff to Reduce Expenses and Improve Revenue
By Amy Bair Career Services Analyst, Florida International University's Chaplin School of Hospitality and Tourism Management | October 06, 2013
"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein
One of my favorite sayings, but unfortunately, where employee engagement and motivation are concerned, most companies are guilty of it. We carry forward the same patterns from our past experience, knowing it did not work then, yet still expecting different results. Does it happen something like this at your organization too? "Dan is scheduled 40 hours per week at the times scheduled for him. He receives a decent yearly salary, 7 days paid vacation (which he must request in advance and it cannot be during the busiest months), and a bonus at the end of the year-assuming the company makes a profit. When a special project comes up, he must learn how to squeeze that into his regular day. He might get a small raise if it turns out well. He is given the parameters for how the project is to be conducted and a weekly progress report is expected. Dan gets stressed, his enthusiasm for the position wanes thus he gets very little done on both work and the special project.
This model is and has been rooted in the narrow image that corporations exist solely to make a profit, that decisions are made based on financial terms (how do we make the biggest profit)-and nothing else. Unfortunately, this strategy fails to consider the other resources required to make the business endure-people and the surrounding society they influence. Modern science though has given us a new perspective to consider.
Dan Pink, who wrote the book Drive: The Surprising Truth About What Motivates Us explains that science has proven people are more motivated intrinsically rather than extrinsically. The old way of motivating people with a dangling carrot or big stick does not work. And in fact, does the opposite.
Instead, people are inspired to perform when they feel what they are doing matters, they enjoy the task at hand, it is interesting and they are part of something important. These concepts have been summarized into three elements: (1)
- Autonomy - the urge to direct our own lives.
- Mastery - the desire to get better and better at something that matters.
- Purpose - the yearning to do what we do in the service of something larger than ourselves.
In his Ted video, "Dan Pink: The Puzzle of Motivation", he offers examples and studies to back his claims. In 2009, the London School of Economics examined 51 pay-for-performance plans. The economists concluded "We find that financial incentives can result in a negative impact on overall performance." (1)
In a 2004 study conducted by University of California, Berkeley, and Massachusetts Institute of Technology titled Effort for Payment, it was concluded that money motivates if a task only involves mechanical skills. However, if a person has to use even simple mental processing to get to a result, money becomes a demotivator. Once a task moves into the realm of requiring "thinking" in order to be completed, the three elements I mentioned above are the motivators required in order for that same task to be successfully accomplished-and keep the employee engaged. The traditional action of rewarding the top performer's best, medium performers medially, etc. actually results in poorer performance. This same experiment held even in developing countries such as India where basic needs such as food and clean water are desperately in want. (1)