All posts tagged incentives

Book review: Drive: The Surprising Truth About What Motivates Us, by Daniel H. Pink.

This book explores some of the complexities of what motivates humans. It attacks a stereotype that says only financial rewards matter, and exaggerates the extent to which people adopt that fallacy. His style is similar to Malcolm Gladwell’s, but with more substance than Gladwell.

The book’s advice is likely to cause some improvement in how businesses are run and in how people choose careers. But I wonder how many bosses will ignore it because their desire to exert control over people outweighs their desire to create successful companies.

I’m not satisfied with the way he and others classify motivations as intrinsic and extrinsic. While feelings of flow may be almost entirely internally generated, other motivations that he classifies as intrinsic seem to involve an important component of feeling that others are rewarding you with higher status/reputation.

Shirking may have been a been an important problem a century ago for which financial rewards were appropriate solutions, but the nature of work has changed so that it’s much less common for workers to want to put less effort into a job. The author implies that this means standard financial rewards have become fairly unimportant factors in determining productivity. I think he underestimates the importance they play in determining how goals are prioritized.

He believes the changes in work that reduced the importance of financial incentives was the replacement of rule-following routine work with work that requires creativity. I suggest that another factor was that in 1900, work often required muscle-power that consumed almost as much energy as a worker could afford to feed himself.

He states his claims vaguely enough that they could be interpreted as implying that broad categories of financial incentives (including stock options and equity) work poorly. I checked one of the references that sounded like it might address that (“When performance-related pay backfires”), and found it only dealt with payments for completing specific tasks.

His complaints about excessive focus on quarterly earnings probably have some value, but it’s important to remember that it’s easy to err in the other direction as well (the dot-com bubble seemed to coincide with an unusual amount of effort at focusing on earnings 5 to 10 years away).

I’m disappointed that he advises not to encourage workers to compete against each other without offering evidence about its effects.

One interesting story is the bonus system at Kimley-Horn and Associates, where any employee can award another employee $50 for doing something exceptional. I’d be interested in more tests of this – is there something special about Kimley-Horn that prevents abuse, or would it work in most companies?