What You Know About Motivation…Is Probably Wrong

If you’ve read this blog for any length of time you’ll know that the impact of incentive-based compensation on recruiting and retention is something that I’m both passionate and opinionated about.  I’ve often referenced Dave Kurlan as being one of the top thinkers of our time with regards to sales-based compensation.  But only a small portion of the typical company’s workforce is their sales team.

People in Sr. Leadership and Human Resources are likely familiar with the studies that have come out about how, on a list of the Top 10 reasons why people take or stay in a role, money typically ranks 9th or 10th.  Thanks to Henry Sauer (the Dean of Rackspace University), a friend who I’ve recently had the privilege of getting to know better, I received the book DRiVE.  He sent it to me because it had a profound impact on him and the way that Rackspace is working to retain their culture of “Fanatical Support” as they continue to grow.

I began reading this book as I was on a plane last week headed up to visit with a client in the Boston area and recognized quickly that this was going to be a page-turner but its information was not going to be easy to digest (and even harder to implement).  On the same flight I read a new report that Dave Kurlan just released about the tenure of salespeople and how tough it is to retain them.

I wanted to share some snippets of both the book’s most compelling findings in its first 100 pages as well as interesting things from Dave’s white paper.

From Dave & The Objective Management Group:

My most recent study and analysis has shed light on some of the characteristics that determine longevity, or to use a more familiar concept, turnover prevention. Turnover, whether voluntary or involuntary, occurs when one party, either the employer or employee, is unhappy with the other. More often than not, the turnover is voluntary, and the employee resigns when income, culture, degree of difficulty or management practices are not to the salesperson’s liking. Involuntary turnover occurs less often because most sales managers are too patient, accept mediocrity, and avoid confrontation, especially a potentially uncomfortable termination.

We live in an era where employees no longer remain with a company for most of their lives. It is not unusual for a younger employee to work for several companies before they turn 30. Today, turnover is inevitable and when you consider the unique dynamic of the odds of a salesperson succeeding, the risk of expensive turnover increases dramatically.

He goes on to talk about the 5 Factors that he’s identified that are the leading indicators in predicting longevity and success for a salesperson:

Figure It Out Factor (FIOF): In the case of retention, those who achieve overnight success tend to look for the next challenge more quickly than those who are slow and steady. Showing these talented salespeople a career path with growth opportunities, more responsibility, and promotions can offset the risk of losing “A” players too quickly.

Sales Quotient (SQ) [Author's note: the proprietary score assigned to a candidate based on the OMG pre-hire assessment test]

Supervision: Sales Managers must be able to effectively coach, mentor, motivate, challenge and develop these salespeople to increase their levels of success and earnings.

Experience: Salespeople with experience – at least 5 years – are much more likely to be retained for 5 years than salespeople with less experience.

Compensation: Salespeople who are compensated mostly by commission are twice more likely to be retained than salespeople who are compensated mostly by salary.

When you consider that salespeople are often classified as “wired to sell”, incentivized to chase deals/revenue and are often have the opportunity to earn uncapped income when they are successful dangled before them, it’s easy to think that it is because they are motivated by money.  However, after reading DRiVE, I don’t believe that it is necessarily the money that is motivating them.

Here are some examples of why (taken directly from Daniel Pink’s book DRiVE):

*Author’s note: Mr. Pink references “Motivation 2.0” throughout the book.  Motivation 2.0 is defined as follows: 50,000 years ago we were trying to survive as a species.  Our motivations were obtaining food, running away from saber-toothed tigers and copulating – an early operating system called Motivation 1.0.  As humans formed complex societies that required cooperation to get things done, M.1.0 was inadequate because it was based purely on biological drive.  We developed a second drive: to see reward and avoid punishment more broadly.  Motivation 2.0 was based on the theory that the way to improve performance, increase productivity and encourage excellence was to reward the good behavior and punish bad.

The trouble is that Motivation 2.0 assumes we’re the same robotic wealth-maximizers I was taught we were a couple of decades ago.  Indeed, the very premise of extrinsic incentives is that we’ll always respond rationally to them.  But even most economists don’t believe that any more.  Sometimes these motivators work.  Often they don’t.  And many times, they inflict collateral damage.  In short, the new way economists think about what we do is hard to reconcile with Motivation 2.0.  What’s more, if people do things for lunk-headed, backward-looking reasons, why wouldn’t we also do things for significance-seeking, self-actualizing reasons?  If we’re predictably irrational – and we clearly are – why couldn’t we also be predictably transcendant?

Bruno Frey, an economist at the University of Zurich, has argued that we need to move beyond the idea of Homo Oeconomicus (Economic man – the fictional wealth-maximizing robot).  He suggests that the new model is Homo Oeconomicus Maturus (Mature Economic Man).  He says that this figure, “is more ‘mature’ in the sense that he is endowed with a more refined motivational structure.”  He goes on to write, “Intrinsic motivation is of great importance for all economic activities.  It is inconceivable that people are merely motivated solely or even mainly by external incentives.”

Consider, the revelations that he revealed above were within the first 30 pages of the book.  Fortunately, he’s got another 185 pages beyond this that continue to drive home his point.  I’ll be blogging more in the future about many of his theories and also attempting to integrate them into the HireBetter Team’s culture and performance-centric environment.  For now, if you’re not ready to go out and buy the book, I’ll share with you one other area of thought that, for me, was when I began to realize he was really on to something and that nearly all employees, even salespeople, are being motivated to perform and produce for reasons that aren’t monetarily driven.  Rather, monetary reward becomes the proverbial “cherry on top” that is the result of the intrinsic motivational factors that pushed the employee to perform.

“An object in motion will stay in motion, and an object at rest will stay at rest, unless acted on by an outside force.”

Newton’s first law of motion is elegant and simple – which is one of the reasons why it is powerful.  Everyone can understand it.  Motivation 2.0 is similar because at its heart are two elegant and simple ideas:

Rewarding an activity will get you more of it.  Punishing an activity will get you less of it.

Newtonian physics runs into problems at the subatomic level.  Down there – in the land of hadrons, quarks and Schrodinger’s cat – things get freaky.  The cool rationality of Isaac Newton gives way to the bizarre unpredictability of Lewis Carroll.  Motivation 2.0 is similar in this regard, too.  When rewards and punishments encounter our third drive, something akin to quantum mechanics seems to take over and strange things begin to happen.

Of course, the starting point for any discussion of motivation in the workplace is a simple fact of life: People have to earn a living.  Salary, contract payments, some benefits, a few perks are what I call “baseline rewards”.  If someone’s baseline rewards aren’t adequate or equitable, her focus will be on the unfairness of her situation and the anxiety of her circumstance.  You’ll get neither the predictability of extrinsic motivation nor the weirdness of intrinsic motivation.  You’ll get very little motivation at all.

But once we’re past that threshold, carrots and sticks can achieve precisely the opposite of their intended aims.  Mechanisms designed to increase motivation can dampen it.  Tactics aimed at boosting creativity can reduce it.  Programs to promote good deeds can make them disappear.  Meanwhile, instead of restraining negative behavior, rewards and punishments can often set it loose and give rise to cheating, addiction and dangerously myopic thinking.

Tags: daniel pink, Dave Kurlan, drive culture, generation Y, motivating employees, motivation, Objective Management Group, recruit don't absorb, Retention, Scorecard, talent acquisition