Friday, May 28, 2010

Money and Motivation

For decades the newspapers have enjoyed reporting about Corporate America gone wrong with stories of greed inside Wall Street and big-energy, and wrongheaded decisions by corporate leaders.  Even after so many years of learning from the school of hard-knocks, the business community continues to make decisions that cause the common person to scratch their head and wonder how such smart people can be so dumb.

We all wonder what is it that makes these Captains of Industry, and the people who follow them, choose the path that leads to having their names and faces plastered on the front page as they do the "perp-walk" into the court house?

The answers are probably many, but at least one is tied to the subject of Money and Motivation.

Without getting into a long conversation about Maslow's hierarchy of needs, "the forces that motivate us tend to shift depending on our personal needs." (Why Pride Matters More Than Money, P. 27)  Everyone is driven to fill basic needs, but what is considered "basic" can vary from person to person. 

Our drive to make money beyond the amount required to provide basic needs is tied to our motivation to achieve recognition as an important and successful person.  Corporate America has learned how to use this drive in its leaders and employees to press for higher and greater achievement of certain goals, usually the sale of products, and accumulation of earnings for the company.

This is a focus on individual success, and what author Jon Katzenbach refers to as Self-Serving Pride.  Each individual is pressed to achieve a goal, sometimes at the expense of others within the organization, and sometimes at the expense of the organization itself.  Enron and the financial market collapse are great examples of workers achieving individual goals and seeking individual rewards regardless of the effect of their behavior on the health of the company or community.  Katzenbach suggests that organizations are missing the point when it comes to constructive motivation.  He writes about the power of pride, particularly institution-building pride, and its role in motivation.

By focusing on money, organizations have found a simple and quick way to push individual performance to great heights for short periods of time.  However, it is often easy for self-serving employees to take advantage of these money-based incentives, increasing their compensation at the expense of the organization's long term health. 

But for the success of the institution over long periods of time it is important to appeal to the employee's emotional commitment, and to establish systems that support the creation of institutional pride.

Leaders need to understand that what motivates the people at the top of the organization is not necessarily what motivates people on the front line.  Therefore, the things that build institutional pride at the top (quarterly earnings, competitive advantage, brand) are not necessarily the things that build institutional pride for the majority of the workforce (working for a highly respected organization, being trusted and supported by managers and supervisors, high quality products, having the tools and systems that allow employees to do great work).

People who are emotionally committed to something - be it a person, a group, an enterprise, a cause, or an aspiration - behave in ways that defy logic and often produce results that are well beyond expectations.  They pursue impossible dreams, work ridiculous hours, and resolve unsolvable problems.

The organizations that have found ways to tap into this emotional commitment are the ones that create long term success by meeting the basic needs for all employees, and establishing reward systems that recognize individual, team, and organizational success.  The employees within these systems take pride in being part of a winning team, and an organization that is highly respected.

Katzenbach points out that "money attracts and retains, whereas pride motivates." (Why Pride Matters More Than Money, P. 128) 

In our society, money is an important part of any compensation system.  Pay must be competitive, sufficient, and focused on creating institutional-pride.  But, without other systems in place that create institutional-pride, employees will always go to the organization that offers the highest pay.

Organizations that create institutional-pride retain the top performers, gain the advantage of emotional commitment, have employees who care about the quality of the service and product, and can achieve greatness.