Case 5

Summary of case:

• Career analyst, Dan Pink speaks about traditional motivators such as salary and bonuses, as being outdated ways to motivate workers
• There is a mismatch between what science knows and business does when it comes to rewards
• Traditional carrots, in terms of bonuses, are researched to lead to poorer results instead of better, when it comes to 21^st century jobs that require innovation and creativity
• The new motivators are instead: Autonomy, Mastery and Purpose.

Challenges

• How to motivate the workforce and keep above-average workers in the business?
• Traditional business is slow to change, for many, bonuses are the only considered incentive
• Can businesses and especially managers change enough to ensure autonomy, mastery and purpose? 

Key Concepts, Theory and Model

There are many ways to motivate an employee. Traditionally, salary and other monetary incentives have been seen as the main motivators. But today, an increasing amount of (especially) young workers, are craving other motivators and benefits.

There are several different components of compensation. There is the base compensation (monthly or hourly salary for example), pay incentives (such as performance rewards) and benefits (on-site gym, insurance, or lunch restaurant, for example). The compensation system can be a mix of the three. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.340-341)

The base compensation, i.e.. salary, can be based on internal company equity (where a certain job, is always paid the same, regardless of who does the job), or it can be based on external equity, whereas the compensation is based on medium pay for all persons in a country working with a similar job title. A salary can be fixed or it can vary according to performance. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.341)

Pay incentives, are often based on performance. If a person, team, department or company performs well, an award is given. Often, this is some sort of a bonus on top of the base salary. It is believed, that bonuses will motivate workers to perform better. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.386)

The case presented above, is of another opinion. Dan Pink is claiming the contrary, that bonuses and pay incentives in most cases reduce productivity and lower results. He claims, that the pay incentives used to be a good way of motivating workers, when the job was very monotone. Today, most people have jobs that demand some sort of creativity and innovative thinking. Studies show, that pay incentives hinder this kind of brainwork and actually lead to poorer outcomes. Dan Pink, says that jobs, that require thinking outside the box, cannot be performed if you have narrowed your vision, into only achieving the goal. (D. Pink, 2009).

Lastly, we come to the benefits. Benefits can vary from company to company. Some offer a wide range of benefits, while others do not offer any. Benefits are things that the company provides of top of the salary and pay incentives. These can include vacation days, on-site childcare, gym-membership etc. More and more companies, are starting to reward their employees with benefits. Dan Pink, also speaks about this development. He speaks of workers being motivated by autonomy, for example. Many people value being able to work when they want to or where they want to. The benefit of having flexible working hours and the permission to work outside of the office is very valuable for some. (D. Pink, 2009) Benefits can also include time spent on “own projects” such as Google allowing workers 20 % of working hours to be put towards creating new ideas and developing them. (J. D’Onfro, 2015)

The future workforce no longer stay motivated by salary and traditional incentives, but demand more. The so called Millenials, are known for their lack of motivation to stay in one company, working to achieve a successful career in a nine to five job, according to author and Public Speaker, Simon Sinek. (S. Sinek, 2016) To the horror of many, these young people are the future of our businesses. That means businesses need to change, in order to accommodate these new needs. Business News Daily lists 15 benefits, that keep employers happy and motivated. These include, among others, no official working hours, family benefits, physical activities, continued education and health care on site. (S. Caramela, 2016) Accommodating these new needs may seem daunting to some, but as Dan Pink says, it may well lead to better performance and a more successful business. 

Literature:

D. Pink, 2009, “The Puzzle of Motivation”, TedTalk, https://www.ted.com/talks/dan_pink_on_motivation?language=en#t-1099099 (6.2.17)

J. D’Onfro, 2015, “The truth about Google’s famous ‘20% time’ policy”, Business Insider, http://www.businessinsider.com/google-20-percent-time-policy-2015-4?r=US&IR=T&IR=T, (6.2.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 10 and 11. Pearson Education Inc. New Jersey

S. Carameka, 2016, “15 Cool Job Perks That Keep Employees Happy”, Business News Daily, http://www.businessnewsdaily.com/5134-cool-job-benefits.html (6.2.17)

S. Sinek, 2016, “Millennials in the Workplace”, Youtube,  https://www.youtube.com/watch?v=hER0Qp6QJNU (6.2.17)