Cain Ullah, Red Badger
Incentivizing Your Staff beyond Carrot and Stick
A common misconception is that financial rewards, such as performance-based bonuses, always help improve employee motivation. In fact, the opposite is often true. So what are the best techniques for increasing employee motivation and productivity?
Early in my career, whenever I had a financial incentive to do well, I generally disliked the process. My performance would typically be evaluated against a number of arbitrary targets, including – at times – a review of my utilization rate. The targets may have made perfect financial sense to the business, but encouraged a strange culture of focusing on being billed or ticking boxes you knew would result in a bonus.
When designing a culture that would support our strategy and drive performance at Red Badger, we decided to do things differently. We began research on motivation, which led us down some very interesting rabbit holes with unexpected findings.
What motivates us?
As we researched the topic, we discovered decades of insights on the subject of motivation and creativity as well as individual and team performance across a wide array of fields ranging from business to psychology to sociology. Dan Pink’s book Drive provides a particularly compelling review of the scientific research on human motivation that has been conducted around the globe.
All of the research points toward a general misconception that the “carrot and stick approach” (i.e. “If you do this, then you get that”) improves motivation. Carrot and stick rewards are effective for tasks that are purely mechanical. For any task that requires some level of cognitive thought, the science shows that such rewards have a detrimental effect on productivity. The simple reason for this is that carrot and stick rewards narrow people’s focus and stop people from thinking laterally, thus inhibiting their creativity. Teresa Amibile, a prominent Harvard Business School Professor, has underscored this finding in her own research:
“Intrinsic motivation is conducive to creativity; controlling extrinsic motivation is detrimental to creativity”
Intrinsic motivation is inside the body and mind. An example of intrinsic motivation would be performing an action or activity because you enjoy the activity itself…because it’s personally rewarding to you. Extrinsic motivation would involve performing an action for tangible rewards (or pressures) rather than for the fun of it.
If you want to motivate team members performing cognitive tasks, you need to find incentives that affect them emotionally. Cash simply doesn’t cut it. Of course, paying your staff well is important to make them feel like they are being treated fairly. However, once they are paid fairly, extra cash incentives related to their personal performance is not recommended. The research shows that three of the key factors that lead to better performance are Autonomy, Mastery and Purpose. Dan Pink describes these three factors as the following:
- Autonomy - Our desire to be self-directed.
- Mastery - The urge to get better at stuff that matters
- Purpose - To work in the service of something that is bigger than ourselves
So what can you do to motivate your staff? Below are a few examples of what we’ve implemented at Red Badger to get you thinking.
Red Badger trusts our staff to do the right thing. The key is for staff to be in control of the decisions they make day-to-day. We don’t have line management (only mentors), so there is no micromanagement. We have flexible working hours and we offer a £2K training budget each year that employees are able to use as they see fit. We run projects with a loose framework designed with autonomous cells of people. Those cells are in charge of the decisions from how the project is run from technology choice to delivery approach. The more autonomy you provide your staff, the more productive and happy, they tend to be.
Netflix provides another great example of Autonomy. Employees at the company have no holiday limit and are able to set their own schedule for paid time off. In practice, their people typically work more than they would have otherwise with a more traditional holiday benefits package. Best Buy also implements ROWE (Results Only Work Environment), where pay is not related to working hours at all.
We try to provide our employees with the best possible environment to collaborate and share knowledge. We explore various ways of doing this, including a monthly company meeting at the office where everyone takes a turn to present key bits of knowledge – be it a demo of a client project or some thought leadership. We encourage them to innovate.
We never take predetermined solutions to our clients, but rather allow our teams to cater solutions specific to the requirements at hand. If that means using technology that we haven’t before, that’s fine. We also are heavily involved in the open source community, building our own open source software and contributing to others. Additionally, we do quite a lot of pro-bono work for philanthropic causes. Our staff is always driving the evolution of how Red Badger does things because they are passionate, smart people who love what they do and we don’t get in their way. The key is to allow our staff the freedom to be creative, to learn all the time, to explore new things and to provide them with work that they feel really matters. The more you can turn work into play, the better.
All great companies have a strong vision and reason for being. It is important for your employees to know exactly what that is in order to feel like they’re a part of the company’s cause. At Red Badger, we take this one step further. Every year we have a company day where we get employees to do a workshop on the company’s vision and purpose. The outcome of the workshop is a whole wall of post-its with insights on why Red Badger exists, how we realize the ‘why’ and what the tangible outcomes are. We then use the outputs of the workshop to drive our value proposition and service offerings. By doing this, all of our staff feel part of a common purpose because they have been instrumental in building it.
Something else that we do (not all companies will be comfortable with this) is to be completely transparent with our financial results. Every quarter we present turnover, profit, margins, cash in the bank, etc. We have found that this not only provide a sense of job security, but it helps employees correlate what they do day-to-day with the overall success of the company.
My final piece of advice is that you aim to build a company with gender equality. We are nearly 50/50 at Red Badger. There is some great research by Anita Wooley, Professor of Organizational Behavior and Theory at Carnegie Mellon, on what makes teams productive. Her findings pointed conclusively to gender equality being more important to increased collective intelligence than individual IQ scores. So, if you want a smarter more productive company, try and build and hire for a culture of gender equality.
About the author:
A computer science graduate who moved into business consulting, Cain has been an advocate of agile and lean methods of Software Delivery for over 10 years. He has worked with large corporations helping them to reduce waste, innovate and build excellent customer experiences. Now as CEO at Red Badger, Cain is responsible for Strategy, Culture, Sales and Marketing. Red Badger is currently working to help clients such as Tesco, BSkyB and Fortnum & Mason build enterprise web applications using innovative tech, process and customer experience.
Illustration provided by Kate Sheridan