As a co-founder and director of a technology start-up, I’ve thought a lot about what motivates staff. And I’ve been puzzled for years by a contradication that I’ve continually encountered. I’ve known lots of successful people in my time, and yet I cannot think of a single one who’s been primarily motivated by financial incentives. That’s not to say that they don’t like earning a decent salary, just that they’re not driven by money. And yet in business — and, during the New Labour years at least — in the public services also, the conventional wisdom is that financial incentives are the way to get higher performance from staff.
So you can see why I was fascinated by this cleverly-illustrated version of Daniel Pink’s RSA lecture about motivation, which is based on his book Drive: The Surprising Truth About What Motivates Us. (Full lecture here.) The essence of it is that financial incentives and penalties work well for jobs/tasks that are dull and repetitive and impose a low cognitive load on those who do them. But the minute one’s dealing with roles which are intellectually challenging, then the carrots-and-sticks approach fails.
Interesting, don’t you think? It becomes even more interesting when one sees that Neil Davidson, the co-founder of Red Gate Software, one of the most interesting and admired companies in Cambridge, decided to abandon the complex commission structure the company had developed to motivate its salesforce and replace it with a system based on (increased) flat salaries. Guess what? It works just fine, and Red Gate is taking its market by storm.
Now, here’s the really interesting bit. You may remember that whenever the issue of paying obscene bonuses to investment bankers is raised, we are solemnly informed by the directors of publicly-rescued banks that it’s essential to continue to pay said bonuses because otherwise the aforementioned wizards will go elsewhere. The clear inference is that they are entirely motivated by financial incentives, viz bonuses. But if it’s really true that financial incentives are what motivates bankers, then doesn’t it follow that the work they do is repetitive, dull and imposes a low cognitive load? And if that is indeed the case, then why don’t we just replace them with software and have done with the whole grisly business?