Forget the Carrot and the Stick

From the time you hire your first employee, you start thinking about motivation.

Sometimes it's simple. Your employee is stellar, so you figure out how to support her and keep her happy. More often, an employee is good at some aspects of her job and struggles with others. Or a whole team's performance has ebbs and flows. And, particularly germane these days, you need to devise how to reward people in an anemic market where profits remain intractably thin.

If the problems are universal, so are the solutions. Managers set goals to guide behavior. Then they create an if-then carrot-and-stick approach -- perform well and get rewarded, blow it and be punished. The carrots differ: promotion, bonus, sales cruise to the Caribbean. As do the sticks: missed promotion, reduced bonus, termination. But for 99 percent of companies out there, this is how we motivate our people. You may be putting a similar program together right now for 2011.

With the top companies in the world using this time-honored approach, it has to work, right?

Actually, according to author Dan Pink, it doesn't even come close.

In his book Drive, Pink makes a compelling case -- based on significant social science research over the past 40 years -- that the carrot-and-stick approach does not work except where rote, process skills are required. Any job that requires insightful thinking, creativity or conceptual problem solving will not see performance increases from the typical if-then motivation schemes. In many cases, throwing money at people has actually been shown to reduce performance.

Let me restate that: More money reduces performance. For any bootstrapped entrepreneur out there, this is a book you need to read!

Pink's book is a counterintuitive romp that reads like a Dateline mystery. Pink shows that in our right-brained, creative economy, what increases performance is more autonomy, a path toward mastery and a defined sense of purpose. People excel when they have the right conditions to self-motivate. His book is steeped in research and includes practical examples of what companies can do to motivate employees. It's the perfect read for the end of the year as you consider how to motivate your team to meet 2011 goals. I can promise you'll have some aha moments.

I sat down with Pink recently at the Association for Financial Professionals conference in San Antonio, where we were both speaking. (He's an engaging speaker. Check out one of his TED talks

Hedges: What made you interested in motivation? Pink: The immediate trigger was that I'd written A Whole New Mind, which argued that we're moving from a world of left-brain thinking (logical, linear, spreadsheet thinking) to abilities that are more right brain, like artistry and inventiveness. In response, people asked, "If that's the case, how do we motivate people to do this stuff?" And I didn't have a clue. I did know that there was a huge body of information on motivation, and I started looking at it. I realized that, No. 1, it was a "ginormous" body of research. Second, it ended up saying surprising things and overturning some orthodoxies. I found it interesting to take this material and connect it to new practices in business so that it might offer people a few insights and tools to do their work a little bit better.

When you began the book, did you start with the premise that the carrot-and-stick approach was dead? Well, when I looked at the initial research, it hit me in the face right away. People should know this! Why doesn't anybody know this? It was so prominent, and in some ways [already] taken for granted in the science. The problem is that the science proceeds very incrementally, and this subspecialty doesn't always know what that subspecialty is doing. And as I looked at it without a dog in the fight about what category or discipline this belongs to, I remember thinking: "This seems important for people to know."

It makes perfect sense [that the carrot-and-stick approach has survived] because we don't see another way to do things. If an if-then technique fails, we don't say, "Let's try a whole different approach" because we don't have another approach in our repertoire. What we do is intensify the existing approach. Let's back up another carload of carrots or let's get really sharp sticks this time.

The good news here is the science gives us clues for what to do. If you look at some of the best practices today in companies, they are operating consistent with the science. I don't think they are basing their policies on science, but there is a subset of people trying to do things a different way.

As entrepreneurs, we often have the flexibility to model what can work. Talk about the ROWE model. ROWE is the Results Only Work Environment. It's a radical form of sovereignty and autonomy over time. It's very simple: in a ROWE, people don't have schedules. They don't have to be in the office at a specific time or at any time. They just have to get their work done.

The whole reason to have a policy is because some people are shirkers and will cheat, and there will be bad actors. And so what we do is create policies for the bad 10 percent even though they shackle the top 90 percent. This is flipping it on its head to say the presumption is "I trust you and know you want to do great work." And we're going to measure people on results, not for simply showing up. They've noticed good increases in productivity. Not extraordinary, but dramatic increases in engagement and retention. People are treated like adults.

Some of the concepts in your book sound like what the Millennial generation is asking for. Will they take to these ideas more readily? These sorts of principles are baked in a little bit to the Millennials in a way that they aren't in my generation. That said, I wouldn't recommend having a Millennial [in a ROWE] right out of college. I'd let them work for a couple of years to get their footing and understand how things work.

Millennials can change the feedback environment in companies. What I realized is that not only do they come from a world of blurred boundaries between work and home, but they've lived in a world of incredibly robust, rich and rapid feedback. You play a game and get a score. You want to see if your friends are around and you get a status update. Then they come into the workplace, and it's a feedback desert. They get annual performance reviews. It's absurd. The workplace is so woefully out of synch with the feedback circles everywhere else in our culture and in our lives. [Millennials] are right. Why shouldn't the workplace, where we spend over half of our waking hours, be as rich in feedback as everything else we do?

You talk about the impact on drive from experiencing flow in our work. How do you figure out what flow is for an employee? It's hard. Flow is the concept from the great psychologist Mihaly Csikszentmihalyi, defined as moments when the assignment is so perfectly matched to your ability that you lose a sense of time and a sense of self. There's not a foolproof way to put everyone in flow all the time; that's not going to happen. You need to be conscious of the folks on your team and when they are doing great work. Ask them how they are doing. Get a sense of their level of engagement. Moments of flow probably correlate to great performance. One thing to do is when people do something great, ask them to explain how they did it.

Csikszentmihalyi found that people think that they are in flow in leisure, but they're not. They're more in flow at work because it's more challenging. We think the good life is chilling out with a football game or watching a sitcom. You're much more engaged dealing with a challenging problem at work than you are sitting on your butt watching TV.

How do you measure around these concepts of autonomy, mastery and purpose? This seems looser than the ingrained models we're using today. You measure results, not the inputs. Just think about hours worked. For routine work there's a perfect correlation between time you put in and outputs. But with [a creative industry like] PR, you can have a great idea while you're walking your dog, and that's hugely valuable. Your clients don't care how long it took you to have a great idea. The measurements have to move toward the results, not the inputs. This is what a lot of companies are doing. The whole nature of a ROWE is you're measured on results. People who don't show up to work and aren't in the office but get their work done and deliver results are fine. People who don't do that are gone. That's the metric.

Consider Zappos and its call centers. They have these very autonomous call centers, compared to most call center [jobs], which are terrible, nonautonomous jobs. Zappos call centers have no scripts, no timing, no monitoring. You do whatever you want to solve the customer's problem. Take an hour on a call if you feel like it. But it doesn't end there. Zappos measures customer satisfaction to make sure it's working. If it didn't work, they'd stop doing it. We have to measure results. We're good at measuring inputs, but they are less relevant than they used to be.

What's your prediction for billable hours? I think they are a really bad idea. I went to law school and worked as a summer associate for a big New York firm. Even then I thought, "What?" First of all, it's a big pain. All you are thinking about is billing time. And I've always been puzzled why clients didn't push back on it. That's why lawyers in big law firms are among the most unhappy people at work -- because time and money are the most salient thing. We're modeling a compensation scheme after Industrial Age work. I think it's silly. If you're dealing with inertia and risk aversion, as you are in the entire legal profession, it's not something that's going to disappear overnight, but it's fading. No one wants to be the first one who says, "We're going to do it differently." I think the billable hour's days are numbered, but it might be a big number.

What one or two things should readers focus on to increase drive in their companies? In some ways entrepreneurs have it easier than people in big organizations. You have to ask yourself "Can I do something tomorrow to make things better?" That's a question that entrepreneurs ask themselves all the time. You don't have to say, "We have to have a ROWE." You can say "What can I do to give people a little bit more autonomy over their time, task, team and technique?"

One of the best things for autonomy, and the biggest bang for the buck, is the idea of the Fed Ex Day. It's one day of intense autonomy where people work on whatever they want and share their results to colleagues the following day. That idea is spreading like crazy.

We've also neglected the importance of purpose in our organizations. You know at your staff meeting, instead of spending 45 minutes talking about how people do things or what they are supposed to do, spend four minutes talking about why. What's the purpose of this enterprise? Why do we get up every day and work our butts off to do this?

It can be daunting to say "I have to change everything." It's less daunting to say "What small thing can I do tomorrow to give my business a little push and some momentum?"