The present style of reward… squeeze(s) out from an individual, over his lifetime, his innate intrinsic motivation, self-esteem, dignity.  They build into him fear, self-defense, and extrinsic motivation.  We have been destroying our people, from toddlers on through university, and on the job.  We must preserve the power of intrinsic motivation, dignity, cooperation, curiosity, joy in learning, that people are born with.

W. Edwards Deming

As management legend goes (and every business school teaches,) Deming’s advice on manufacturing quality was falling on deaf ears here in the U.S. but he found a rapt audience when he took his ideas to Japan after WWII.  He is probably the key person responsible for the quality turn around in Japanese products.  This was most evident in the auto industry. U.S automobile quality was terrible, Japan was worse but they listened, and Toyota quickly became and is still now a dominant car maker in the U.S.  Honda, Subaru, Nissan and many others are also doing quite well.

What you may not expect from such a guru on manufacturing quality and performance is something like his quote above.  Deming comes out very clearly and firmly against extrinsic reward systems!

Here are a couple more Deming quotes to reinforce that point:

        ”The idea of a merit rating is alluring. The sound of the words captivates the imagination: ‘pay for what you get; get what you pay for; motivate people to do their best, for their own good.’ Well, the effect is exactly the opposite of what those words promise. Everyone propels himself forward, or tries to, for his own good, on his own life preserver. The organization is the loser.”

        ”The merit rating rewards people who conform to the system. It does not reward attempts to improve the system.”

The book Punished by Rewards is all about this. I return often to one of my favorite examples of how rewards backfire, pulled from its pages.

A group of psychological researchers is studying the effect of different sorts of rewards. The study is done using young children in a school setting. The study starts with the researchers handing out art supplies. It is a free period, so they can do whatever they like.  As you might expect, some kids run around the room, but a great number of them settle down to make some art. The researchers take note of which kids are engaged in artwork. With this baseline established, the next week begins the experiment.

The following week, kids who spent the most time doing artwork are randomly divided into three groups. The first is the control group. They are given the art supplies and just like the first week, they settle down to do art. The second group is a test group. They are told that if they do great artwork today they will be given an art appreciation award. This award is a ribbon of the sort schools often give out (I am sure you have seen them). This group settles down and does art just like the first group and just like they did the first week.  At the end of the period each child in the second group is given an “Art Appreciation Award,” as they have been promised  The third group is also given the art supplies and they settle down to do art.  At the end of the time they are all surprised by being given an Art Appreciation Reward. They were not expecting it! 

The third week rolls around and again the control group is given art supplies and they settle down and do art.  The second group is given art supplies and told that unfortunately “we are all out of art appreciation awards.” This second group proceeds to do almost no art. The third group is given the art supplies and told that unfortunately “we are all out of art appreciation awards”.  This group settles down and does the same amount of art as the first group.

What happened to the second group? They liked to do art.  They were randomly selected from kids who like to do art.  The third group did not get any rewards either and were told that there were none, but they did just as much art anyway.

The difference is subtle but obviously extremely important. The kids in the second group were given an IF=THEN reward.  If you do this = then you will get that.  The third group was given a NOW THIS! reward.  They were not expecting anything, and yet they got a reward.

The second group was doing something they liked doing. However, all the while they were doing art they were thinking about an extrinsic reward. And it was a really small thing, just a ribbon.

An if=then reward is an extrinsic reward.  It is essentially, as the title of the book suggests, a bribe.  The kids were all randomly selected from a group of kids who intrinsically liked to do art.  They quickly became trained not to do it unless there is something extra in it for them. They have been refocused on the reward instead of the art itself. As Deming says so well, “squeezing out their innate intrinsic motivation.”

One takeaway from this is that if I am being bribed, then the thing I am being asked to do must be something that people don’t want to do, hence the bribe for doing it.  

The third group was unaffected because they did not expect the reward, hence it did not become a bribe. They were still doing the art because they just liked doing it.  The presence of a reward or lack thereof the third week was therefore of no negative consequence.

One of the great joys in life is doing what we do well for the benefit of our group.

Gavin Watson

When our workplaces give us bribes to do what we do best and what we love doing it squeezes out the intrinsically rewarding nature of our work lives. If this continues to happen, as Deming says it will also destroy our motivation, self-esteem, and eventually our dignity.  Who wants to do that to anyone?

How many of our workplace systems are set up to extrinsically motivate us?

Now I know that some people may read this and think, “but I can’t get people motivated any other way!”  If that’s true, and to some extent I hear you and agree with you, it is not because people are born to be extrinsically motivated. It is rather because they were trained to become that way, through reinforcement over time.  Effectively, many managers have unwittingly “destroyed” what was not broken in the first place! Most of the destruction may not have occurred while they have been working in your company. It may have begun at school as Deming suggests and continued at other places they have previously worked.  This will take some time and patience to reset.

Knowing this, we need to reset work practices. Eliminate all extrinsic rewards (AKA bribes) from the workplace. Including even (and this might come as a shock!) the bribes considered essential to motivate that separate species of human, the “salesperson” who is usually the primary target of this bribery.  You want your sales people thinking about the customer’s needs and how your company can creatively help them, not how large their bonus is going to be. So, compensate them fairly, with an amount typical for a salesperson living where they are doing the work in your type of industry. I would also add in some great advice from Janet Yellin that you should “pay above average”.  This builds in a bonus, and takes the issue of money and fixation on bribes off the table and out of mind.  Your salespeople can now focus on doing what they love to do.  Find that sweet spot, where the company provides what helps the customer get their needs met. 

If=then rewards are particularly destructive.  “Now this!” rewards (the kind the third group of kids were given) can become “if=then” rewards if they are expected.  If every time you do something I surprise you with a gift card you will begin to expect a gift card when you do it.  It has now become an “if=then” reward.  If you do the thing and you don’t get a gift card you might even ask me why I didn’t give it to you.

Don’t let HR tell you (as my HR department did) that we need to set up a gift card reward system to reward ABC type behaviors predictably and equally with XYZ rewards, and that all managers should have a meeting and agree on the metrics we would all use consistently to give them out.  That’s the surest path to an If=Then reward system.  Treating people fairly is not the same as treating them equally.  We want to be treating people fairly.  Fairly means treated as the individual (i.e, distinctly different) person I am. Conformity does not equal fairness. 

Now, I do like surprising people with gift cards. Or just seeking out someone to thank for a job well done.  It’s fun! Just keep mixing it up.  

People should be coming to work for the intrinsic rewards. Two Intrinsic rewards are positive emotion and relationships.  So, a Hi-5 is a good thing.  Someone may be a consistent high performer and not get a lot of recognition, yet they are happily engaged in what they find fulfilling every day.  Work can be (and should be) its own reward.  Someone else who has been working really hard to learn a new job may just barely manage something for the first time.  It might be far from perfectly executed, and it may have taken them a lot of time to do it, but YEA! They did it!  Hi Five!

So am I saying eliminate all extrinsic rewards: bonus money, special parking places, a corner office, a company car etc?  

If it is an If=Then bribe to elicit a certain behavior then yes, that is exactly what I am saying.  If it is rare, spontaneous and unexpected, a fairness issue or a group reward that is OK.  

If for example everyone who works for the company for 20 years gets XYZ then you can keep doing that.  That is just a fairness thing.  It is not something you did as an individual to get it,   it is something related to the job or role you are doing and everyone who is in that same group doing that same thing gets the identical same thing no more or less.  That’s just fairness.  Fairness is good.  

It is also better to give rewards to groups instead of individuals.  That fosters group collaborative effort instead of selfish effort.  We don’t want to create a system in which an individual wins and “the organization is the loser” as Deming says.

The best sort of reward is a bonus (pizza for everyone on Friday, or a company trip, or whatever) to everyone in the company.  Afterall, everyone who showed up contributed to the company’s success that week.  It is best to give the same amount to everyone regardless of position, or possibly even more to those who earn less.  It will mean more to them, and we all like taking care of each other.  Leaders who take care of those who need it most are regarded much more favorably by their group.  If you want to instill loyalty, take care of the ones who need the most help.  We all care about and will protect our group when our group cares about and protects the most vulnerable among us.  It’s a sign of a healthy group.

In any case, sharing an if=then reward with everyone in the company, or possibly just the people in a given location signals that ‘we are a team, and we are all in this together.’  Which is exactly the message you want to send.  We may be thinking about this reward while we are doing our work, but we will be thinking of the good it will do for the others in the group.  It is not a selfish motivation now.  Now I am motivated by doing something good for my whole group.

Bottom line: If your people are not engaged in their work and not being intrinsically fulfilled it could be that some of the company “compensation” systems may be unintentionally getting in the way. Have YOU had an experience like this? Let us know! Leave a comment on this blogpost or email us at [email protected]

Cheers for Friday,

Gavin Watson, Chair, Conscious Capitalism Connecticut Chapter

Gavin Watson & Associates

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