I get a twisted kind of pleasure when good arguments cause me to reconsider my long-held beliefs. The recent book by Clayton Christensen, “How Will You Measure Your Life?” (HarperCollins, 2012), spurred such a transformation.
Based on a speech he gave to Harvard Business School’s graduating class in 2010, Christensen’s book observes that although many business people seem to be wildly successful, their lives do not appear to bring them happiness. This truth reminds me of one of my favorite one-liners, attributed to Confucius: “Choose a job that you love and you’ll never work a day in your life.”
Christensen’s book did not give me pause until I reached the chapter on motivation and incentives. He cites an influential study from the 1970s about incentive theory, the idea that people work in accordance with how you pay them. The authors of the study, Professors William Meckling and Michael Jensen, asked why managers don’t always act in the best interest of shareholders. They concluded that the solution to this contradiction was to “create financial incentives that are aligned with the behavior you seek.” Their solution seems so intuitive that many companies have used this reasoning to issue awards ostensibly designed to make shareholders and executives happy.
According to Christensen, Meckling and Jensen’s theory on incentives has been widely applied to all types of businesses, including financial services firms. The incentive theory says that when you want to convince others to do one thing over another, you just need to pay them in order to “motivate them.” However, many of the companies that have utilized this strategy, including Bear Stearns and Lehman Brothers, no longer exist.
Christensen holds a contrary view to Meckling and Jensen. He notes that some of the hardest working people are employed by nonprofits and charitable organizations. Despite working in challenging and uncomfortable environments, such as war zones and areas devastated by drought, disease and natural disasters, you almost never hear complaints about motivating people who work for these organizations. Christensen gives other examples of modestly compensated jobs that attract people who are driven to excel: teachers, social workers, military personnel and clergy (though the latter may be banking on the ultimate reward).
He argues that hiring motivated people, matching them to the right jobs and eliminating distractions will produce the desired outcome regardless of whether you pay them more for their results. He also states that compensation itself can be one of those distractions if it is not competitive, fairly distributed and well designed. But money is not necessarily a motivator.
To make his point, Christensen references motivation theory, the idea that people do things because they want to, not because they get paid to. Motivation theory distinguishes between “hygiene factors” and “motivation factors.”
Examples of hygiene factors include status, job security, work conditions and compensation. Unsatisfactory hygiene factors can cause people to become dissatisfied — but interestingly Christensen does not regard compensation as a motivation factor, but rather a hygiene factor.
Motivation factors include challenging work, recognition, responsibility and personal growth. Motivated people don’t require external pressures or incentives because they are driven by what’s inside them and by the excitement and challenge of their work. What they do require is an environment in which they can grow, be intellectually stimulated and enjoy the appreciation of their peers and superiors.