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Sunday, 3 June 2012

Commissions, Bonuses, Incentives? Better to Give Your People a Purpose!

One of the pleasures of this technological world in which we live, is the ability to tune into work by many eminent leaders, academics, teachers, gurus and other assorted (and sometimes. so-called) experts.
I recently heard about a series of animated lectures on TED under the heading of RSA and one in particular by Dan Pink.  You can find it at www.youtube.com/watch?v=u6XAPnuFjJc  
It just so happens that Dan is one of the keynote speakers at the forthcoming Vistage Global Chair and Member Conference to be held in Dallas, Texas early in 2013.
This particular video proposes a radical view of the bonus culture, in that a vast amount of research all over the world has shown that financial incentives work well when the task is mechanical requiring little if any conscious thought.
On the other hand, the research shows that if there is even a modicum of intellectual input required, performance actually deteriorated with a financial incentive. Consider, for example, the issue of bonuses and subsequent success or otherwise in the financial sector.

Radical indeed, and it gives the lie to those who simply offer higher and higher monetary bribes (because that is what they are) in the hope of enhanced performance.

The presentation caused me to recall a sales representative who never earned more than around 10% overall commission.  When we taxed him with this he said that a 10% improvement in his salary was sufficient and he didn’t aspire to anything more.
Dan Pink suggests that given a task requiring intellectual input, three criteria come into play if performance is to be improved:
·       Self-determination
·       Mastery
·       Purpose
Self determination in effect means giving the individual the freedom to undertake a task without interference invoking that overworked word, trust.  There is nothing as demeaning as being tasked with achieving someone else’s objectives.
Mastery implies a comprehensive knowledge of the background and the technology involved in the task.  Kenneth and Will Hopper in their wonderful book, The Puritan Gift, call it Domain Knowledge and that is best achieved by making sure that everyone has experience across the board throughout the business.
Finally, there must be a purpose for people to want to achieve; the need for them to see an objective that is relevant to them and which means that they can understand what success looks like.
Given those three criteria, who needs financial incentives?  Make sure that your best people are more than adequately remunerated and then give them their head.  That is the route to success for everyone and for the business.  Thank you, Dan Pink.

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