When I worked for Autodesk from the mid to late 1990’s the company was routinely recognized as having one of the best corporate cultures. Dogs allowed at work, unlimited free soft drinks, 6 week paid sabbaticals, flexible work hours, plenty of autonomy, mastery and purpose.
But then something happened. Thousands of DotCom companies started hiring the best people from the best companies. Most of the established software companies were decimated. Autodesk lost 20%-30% of their workforce to start ups.
Why would highly motivated, purpose driven professionals leave a company like Autodesk? Primarily because of higher salaries and stock options.
Money folks.
Certainly Dan Pink’s Ted presentation on motivation is entertaining. And some of makes sense. Pink’s “Forget the carrots and sticks, they don’t always work” article is equally entertaining comparing today’s compensation methods to an anachronistic, pre-Copernicus sun revolves around the earth view.
Instead, Pink proposes a motivational system that is based on three pillars:
- Autonomy: the urge to direct our own lives
- Mastery: the desire to get better and better at something that matters
- Purpose: yearning to do what we do in the service of something larger than ourselves
Sounds great, but most of it is bullsh*t. I know I am being harsh. But following his advice may lead to your company’s ruin. I don’t want that to happen.
#1 Money Equals Time 
Time that you can use to do what you want, start a new business or travel the world. Most salespeople I have managed are driven by incentive compensation because it allows them to work harder and build up a “f#ck you” fund.
No corporate culture, no purpose driven work, no autonomy controlled by a corporation is better than controlling the corporation of you and your family. And that’s what money buys you.
Sure a positive corporate culture with plenty of perks is great and I support Pink’s view wholeheartedly. But it’s naïve to assume that the elimination of carrots and sticks and adding purpose driven work will create more motivated salespeople.
#2 In America, Money is our Barometer for Success
In the book The Culture Code, author Rapaille studied the cultures of countries and companies and developed a code for which we live. This code (or mind-set) is a powerful force that drives people to take predictable actions.
Rapaille found that money is the American scorecard. That Americans find it impossible to feel successful if they feel underpaid. Because of that, we see a very strong connection between money and work. Money earned via hard work is admirable, proof that you are doing a good job.
#3 Money is not a Goal in and of itself
For most Americans, money only demonstrates our value in our jobs. And for many European cultures, money is looked at differently. At a certain point, they shrug their shoulders and settle into a relaxed lifestyle, leaving the world of business behind.
I believe most Americans want to work in an environment where they have a sense of purpose, feel motivated, and have autonomy. But it will never override their money as scorecard and social proof code.
That’s why Google had to offer a staff engineer $3.5 million to stay at Google and not leave for a competitor. Moreover, Google had to increase EVERYONE’S pay by 10% in order to mitigate the risk of them leaving.
If as Pink says carrots are not the answer, why not make Google employees’ jobs more meaningful, more full of purpose, more autonomous. In fact Pink cites Google as one of these utopian companies that allow its employees to work freely and autonomously. I guess he won’t be citing Google anymore.
Where’s the Proof Dan?
Speaking of proof, Pink cites only two small companies (out of millions) that he claims have eliminated commissions and are seeing success. To his credit, Pink does state in his closing paragraph that not all companies should eliminate commissions, but his parting shot is to challenge the supposed fixed laws of compensation.
To that I say, that Pink is challenging the laws of human nature and an American culture code. The former has been in place for millions of years, the latter for over 230. Good luck Dan.
To Pink’s examples from the MIT research and Federal Reserve Bank, I can say from personal experience that games and real life are different. Compensation in a game is far different than compensation in real life with a real job. Moreover, most cognitive games are short term in nature. They don’t extend over long periods of time like work does in the real world.
Therefore, the short term cognitive game can be influenced by how much fun your having and less by any perceived compensation. But if that game were extended over time, the results would change dramatically. Higher variable incentives would win out.
Of the two companies Pink cited as having eliminated salesperson incentives and claiming the program has worked; I’d like to see how those same companies are performing against their competitors. This metric is a far better measure of success than a subjective, internal view.
I’d also like to see how those companies compete for salespeople in the marketplace. How can they convince a salesperson to join their organization when that salesperson is making $300,000 a year and now is being asked to accept half as much money? By assuring them that they will feel more autonomous, have more purpose, or achieve sales mastery?
No, not going to happen. On second thought, possibly in Europe, I’ll give him that.
Don’t Rely on Socialized Sales Plans
Please do provide a corporate environment where everyone feels motivated and full of purpose. Do it because it’s the right thing to do. Don’t do it to somehow convince your sales force to give up an incentive plan. You’ll fail.
In fact like Google, in the late 1990’s Autodesk had to increase salaries to stave off the exodus to the DotCom’s. As an alternative they could have improved the corporate culture. But Autodesk knew that it would not have worked because the culture was already extraordinary (and markedly fulfilled Pink’s 3 pillars above).
As further proof, a recent Harvard study run by Roland Fryer Jr. paid kids for good grades and good behavior. As you might of guessed, the program worked. Worked extremely well. Fryer concluded, “If incentives are designed wisely, it appears, payments can indeed boost kids’ performance as much as or more than many other reforms you’ve heard about before — and for a fraction of the cost.”
So just because someone as eloquent, good natured, and well meaning as Dan Pink says that the world has changed, doesn’t make it so. I doubt he’s the 21st century Copernicus no matter how convincing he is to you and I.
Instead, look at the billions of successful experiments occurring everyday in almost every for profit business. Look at the millions of salespeople that have been paid for working that extra hour every day, making that extra call, taking the time to research her prospect to better understand their needs.
They do it because the proper incentives are in place.
P.S. Saturn, which had the largest socialized Automobile sales plan was recently shut down. Probably not primarily due to their sales compensation approach, but it didn’t help either. And ask yourself why didn’t any of the the auto dealers follow the Saturn model? Success spurs copycats.
Fair challenge to Pink’s assertions Mark. I definitely think money is a huge influence, but not necessarily for the sake of being able to accumulate more things/freedom. Certainly, those matter, but so do autonomy, mastery and purpose. I think with the exception of money as it relates to pride those things are all relatively equal (i.e. At some point a certain amount of $$$ is sufficient and Pink’s motivational system matters more.
Now, back to money as it relates to pride as I you allude to in #2 and #3. I think it has less to do with what I have and more to do with what they have. Many professional athletes have all the money they could ever need, but they want more. Why? Because Player X is very similarly skilled and makes that amount. And I think that’s fair.
For example. I work in a truly great environment that really emphasizes the pillars Pink discusses. Those thing matter a great deal to me, but I’d still be disheartened if I thought someone doing a very similar job to me was making significantly more (presuming he’s not more experienced/better at it). Not because I necessarily need more, but because it feels unfair. In essence, I’m probably agreeing with you, but alas… that sells less books, no?
All good, i agree proof is required, but
1) the ‘American emprire” is in decline … perhaps (just perhaps) the money culture isn’t doing it
2) Most of Dan’s discussion was about the type of work and rewards, and it seems to me that if sales people are of the mindset of building a “f#*K you fund, you aren’t dealing with people in the cognitively challenged area
3) “Most salespeople I have managed are driven by incentive compensation because it allows them to work harder and build up a “f#ck you” fund.” – doesn’t sound like you have an ideal corporate culture so you are underperforming anyways..
Well, of course you don’t care about those non-monetary things. You wouldn’t have risen to the top of the old system if you were the kind of person who had big issues with it. What medieval king would think the peasants would even want to vote, let alone believe they’d do a better job?
Your first example is certainly bunk. The reason people leave for startups generally isn’t the money. Maybe during the bubble startups could afford to pay more, but normally they can’t. They can still steal a lot of the best people from big companies, though, because they provide more of exactly what Pink is pitching: autonomy, mastery, and purpose.
You go on to mix up dislike of being underpaid with being motivated by money. People do hate the feeling that they are being treated unfairly, and they do use salary as one measure of that. But that doesn’t mean that paying them more than fairly gets better results over the long haul.
There’s also plenty of research showing that incentive payment systems reduce creativity and quality of work. See Kohn’s “Punished by Rewards” for the details. For traditional sales, where marks are manipulated into buying and into paying too much, that’s perhaps fine. Who cares if the sales guy is going to flake out in a couple of years? You can always get another, hopefully one carrying enough debt that he’s a little frantic. But there’s a reason salespeople rarely end up running productive companies. Conditioned by short-term incentives and, like all mercenaries, focused on filling their own bank accounts, they don’t have the sense of purpose needed to create and sustain value-delivering businesses.
But I think the long-term problem with your approach is that less and less commerce is human-mediated. People have access to a lot more information, and better control over their channels of communication. As transaction costs get lower, deals happen more often, and are therefore small enough that sticking a salesperson in the middle is too expensive. E.g., maybe I don’t need multiple sales calls for an enterprise development support system when I can put GitHub and JIRA and GetSatisfaction on my credit card as I need them.
In circumstances like that, instead of spending on sales, the money gets put into better products, and more authentic communication with users. That absolutely can’t be done on a commission basis, for reasons that Kohn and people like Steve Blank explain. For that reason, I hope Pink is right, because otherwise there will be a lot of old salesmen chasing a shrinking number of jobs, with none of the skills needed to stick around at companies and do more creative work.
If you take the over-simplified version of Dan Pink’s advice, yes, it’s bullshit. But if you listened to what he was actually saying, you’ll find it’s a lot more nuanced than “money doesn’t matter.” That’s why the foundation tenet of his advice is to pay people fairly and get that issue off the table altogether.
“That’s why Google had to offer a staff engineer $3.5 million to stay at Google and not leave for a competitor. Moreover, Google had to increase EVERYONE’S pay by 10% in order to mitigate the risk of them leaving.”
Just because Google does something doesn’t mean it’s wise (or effective). I predict Google will continue to lose their best staff over things that have nothing to do with pay and everything to do with culture, work environment and the need of their top talent for new and exciting challenges.