One of the more provocative pieces of the Maersk workshop in Copenhagen had to do with the issue of employee motivation and performance appraisal. Many corporate incentive and performance systems are not taking into account what the science is saying about what motivates people. Daniel Pink in a TED talk outlined the key points:
- As long as a task requires only mechanical skill, bonuses work as they would be expected – the higher the pay, the better the performance.
- Once a task calls for even a rudimentary amount of cognitive skill, a larger reward often leads to poorer performance.
- Extrinsic motivators, which Pink refers to as “if-then” rewards, often destroy creativity.
- The secret to high performance isn’t rewards and punishment but rather that unseen intrinsic drive, the drive to do things for their own sake, the drive to do things because they matter.
There are two videos that I highly recommend. The first is the original TED talk from August 2009. More visually entertaining is the RSA video which shows the same content but portrays it using graphic recording.
The conclusions reached by Pink are the result of various studies. For instance, in early 2009, economists at the London School of Economics looked at pay for performance schemes and concluded that “financial incentives … can result in a negative impact on overall performance.” In the video, Pink cites studies sponsored by the Federal Reserve Board of the United States.
The implications of these studies for how we manage and lead our organizations is fundamental. These findings are the essential building blocks of any modern approach to leadership. So what motivates people? Autonomy, Mastery and Purpose
In short, people are most motivated when they have choice, when they are able to demonstrably improve their skills and when what they do has meaning to them.
This may not seem like surprising results, but they do contradict what most business do in trying to incentivize performance. Watching this video at Maersk produced the expected results. Workshop participants had a long discussion on the implications for their performance review system and for the company bonus system. At Maersk, there is a forced ranking of employees on a performance scale. The ranking directly influences the bonus that an employee receives. Every year, the “leaders of leaders” at Maersk could sense the demotivation that is created by this process. The Dan Pink video helped them to see their intrinsic unease with the process in a different light. Real motivation – that extra striving to do something not only well, but to the best of one’s abilities – is not created by a bonus system.
“Motivation is a fire from within. If someone else tries to light that fire under you, chances are it will burn very briefly.” Stephen Covey