It’s so true that it’s turning out into a cliché. Dan Pink’s ‘Drive‘ is out with the tagline ‘The surprising truth about what motivates us’. (Surprising to whom?). The Economist’s resident bard on business, Schumpeter, chimed in too, though surprisingly in right direction.
One can hardly help the feeling that we are directed towards a false dichotomy. It doesn’t have to be such. Intrinsic and extrinsic motivation are not mutually exclusive, and perhaps the need is to seek a balance or a holistic treatment taking the context in consideration. This is the very least to be expected from an author of a book on right brain thinking. The importance of context seems to be missing.
Schumpeter argues that for most of jobs being outsourced and automated, primary motivation need to be of intrinsic variety. (As if the people where the job is being outsourced to are too dumb or too cheap to need any intrinsic motivation). But people don’t always rely on their employer to unleash their creativity. There are millions who paint, write, make movies, form great organizations, champion causes, once their paying-the-bills-day-job is over. I saw a group of very passionate people holding onto their mundane jobs create and take to great heights a fine cinema club. Little wonder Hugh MacLeod had to suggest ‘Keep your day job‘. The losers here, hardly unsurprising, are the organizations.
In any case, it is next to impossible for anyone to imagine in separate context money and organization (at least in capitalism). Maybe that’s why not-for-profit and open source has involvement without monetary expectations, because the context itself is non-monetary, with organization not dying for the last dollar. Schumpeter also mentions “Paying people to give blood actually reduces the number who are willing to do so“. Because by linking it to money, market norms encroach on social norms; and expectations were different in both cases. Dan Ariely captures this well in his Predictably Irrational.
McKinsey Quarterly carried on with the suggestion that current recession gives the organization a good chance to move from financial to non-financial (intrinsic) opportunities. Money is scarce, employee morale seeing a new nadir everyday, yet the need for retaining and attracting talent is as crucial as ever. So, no better time than now to make the change.
McKinsey then asks: Why haven’t many organizations made more use of cost-effective nonfinancial motivators at a time when cash is hard to find?
One reason may be that many executives hesitate to challenge the traditional managerial wisdom: money is what really counts. While executives themselves may be equally influenced by other things, they still think that bonuses are the dominant incentive for most people. “Managers see motivation in terms of the size of the compensation,” explained an HR director from the financial-services industry.
Another reason is probably that nonfinancial ways to motivate people do, on the whole, require more time and commitment from senior managers. One HR director we interviewed spoke of their tendency to “hide” in their offices-primarily reflecting uncertainty about the current situation and outlook. This lack of interaction between managers and their people creates a highly damaging void that saps employee engagement.
But there’s another dimension. And that’s money is not just about only money. It’s a lot more things.
In September 2003, Richard Grasso, who was then the head of the New York Stock Exchange, became the first CEO in American history to get fired for making too much money.
‘ The explanation for people’s behavior might have something to do with an experiment called the “ultimatum game,” which is perhaps the most well-known experiment in behavioral economics. The rules of the game are simple. The experimenter pairs two people with each other. (They can communicate with each other, but other they are anonymous to each other.) They’re given $10 to divide between them, according to this rule: One person (the proposer decides), on his own, what the split should be (fifty-fifty, seventy-thirty, or whatever). He then makes a take it or leave it offer to the other person (the responder). The responder can either accept the offer, in which case both players pocket their respective shares of the cash, or reject it, in which case both players walk away empty-handed.”
It seems it’s rational for proposer to make a lowball offer and the responder, left with no choice, to accept it. Whatever it is, responder is left with no money if he doesn’t accept it, which is worse than accepting a ridiculously lowball offer. In practice, though, this rarely happens. Responder, in most cases, rejects it.
This experiment is repeated across countries; with million dollar; with capuchin monkeys. The results are the same.
Because, money is an indicator of fairness, and humans and capuchin seem to care whether rewards are fair. It means people think it is very important that they (and everyone else) get what is deserved. People not only compare rewards within organization but also within society. We are all too familiar with banker bonuses and Wall Street packages. Also, we are not very unfamiliar to see in some cases the very executives championing intrinsic rewards eyeing fatter pay packages. Money being one of the few tangible things as far as rewards go, people are very likely to root for more money in such cases. If not anything else, it gives them the sense of being fairly treated.
Dilbert has a telling strip where Dilbert, Alice and Wally present a wrapped gift box to PHB pooling their bonus money, which on unwrapping appears to be empty. Dilbert and all say “Better luck next time”.