The Quest for Peak Performance
Tiziana Benvenuto
Limitations of Incentive Pay and the Power of Shared Purpose and Vision
So, you’d like to get more out of your people and you’re considering a carrot or other root vegetable you’d like to toss them. Maybe tossing something isn’t the answer.
In the quest for peak organizational performance, a longstanding approach has been to dangle the carrot of incentive pay. The premise is simple: offer a financial reward for achieving specific targets, and employees will naturally be driven to work harder. If this doesn’t have a tone of manipulation, it certainly has a transactional one.
Human motivation is influenced by many different factors – internal physiological states, environmental conditions, and a plethora of history and experiences. How can one vegetable possibly handle all that?
The Shortcomings of Incentive Pay
Incentive pay assumes all employees like carrots and want more carrots, lots of carrots. Competitive salaries are important, but they are not the sole drivers of employee performance. Studies show once employees reach a level of financial comfort, the lure of more money loses its appeal. A meta-analysis by Judy Cameron and colleagues concluded that “strategies that focus primarily on the use of extrinsic rewards do, indeed, run a serious risk of diminishing rather than promoting intrinsic motivation”.[1]
Also, consider that incentive pay can trigger internal competition and turn the workplace into a circus. When that competition gets tight enough, employees will juggle flaming phones, tightrope walk on spreadsheets and perform death-defying stunts on targets. That can lead to a culture of short-term focus on the next target instead of a long-term focus on the health and sustainability of the business.
Adding more carrots, whole, juiced or as a salad isn’t the key to scaling up your business. Create a culture of collaboration by leaning into a shared purpose and shared vision.
The Power of Shared Purpose
The desire to have purpose and belong is a fundamental part of human nature. We each seek to be a part of something and to be valued for the contribution we make to that something.
Although this applies to any area of life – family, extracurricular activities, society – when we commit to a workplace, we want to be a part of something bigger than our cubicle. A shared purpose goes beyond individual goals and answers the fundamental question of why the organization exists and what it looks to deliver to the world. As employees understand and align with this purpose, they get a deeper sense of fulfilment from their work.
A shared purpose fosters a sense of community and collaboration. Maybe a business is working to make customers smile, save pandas, or prevent accidents. Actively linked to a shared purpose, people are not pitted against each other but are integral parts of a collective endeavour. Seeing the impact of work on customers and beyond (society, environment, etc.), people experience a more profound sense of achievement than another financial reward could offer. Fair compensation is key but put a hold on more carrot muffins.
The Unifying Force of a Shared Vision
A vision speaks to where an organization aspires to be in the future. When employees are allowed to have input into this vision it becomes a shared vision and they are more invested in making it happen. Consider kids having input into the family vacation destination. If they feel their input was heard, acknowledged, and perhaps refuted with good reason, they’re more likely to enjoy the ultimate destination even if it wasn’t their suggestion. When people are clear that their contribution fits into the bigger picture, they understand their relevance and importance, and are motivated to contribute their best.
A shared vision can also facilitate more freedom, autonomy, and creativity within the organization because the direction and goal are clearly understood. Perhaps that’s like saying… even if you don’t travel with your (age appropriate) kids to that vacation but you tell them where you’ll be, they’ll get themselves there!
Cultivating a Sense of Belonging
Humans like to feel happy or comfortable as part of a particular group. They like having a good relationship with the other members of the group. That’s belonging. Humans like to belong. When people feel like outsiders, their mental and discretionary energy is not invested in what they’re supposed to be doing. When they feel like just another cog in the wheel, they’re certainly not motivated to give their best.
A workplace culture of belonging is one where employees feel seen, heard, and appreciated. In such an environment everyone is cultivating community spirit, encouraging positive outlooks, facilitating growth opportunities, fostering open communication, and establishing trust. Everyone is more engaged and committed because they care about the output of the organization.
A Story of Shared Purpose and Vision
Let’s consider a fictional company named GreenTech Innovations, a startup in the renewable energy sector. It was founded with a clear vision: to revolutionize the energy industry by making sustainable energy accessible to all.
This was a very ambitious goal, and the leaders of this company knew it was going to take more than just skilled employees; they needed a team that understood the importance of and had an unwavering passion for a greener planet.
So as time passed and the company grew, the leaders took every opportunity possible to communicate their vision of a greener planet through accessible sustainable energy. They made sure their employees were up to date on positive changes their technology made in the remote communities they were serving and specifically how their collective efforts were improving people’s lives. They celebrated financial successes as well as the number of remote villages positively affected, and milestone solar panel installations.
One of the stories that touched the employees deeply was learning of a small school in an isolated village that now had access to reliable electricity thanks to GreenTech’s solar panels. The children expanded and revitalized their learning by using technology in their classrooms, villagers used the school after dark to host community events which enhanced community connection and collaboration. This is the story that became a symbol of GreenTech’s purpose and a reminder that their work had far-reaching implications.
It was the shared purpose and vision at the foundation of GreenTech’s existence that fostered a culture of trust, commitment, and camaraderie. Employees were not just working for a paycheque; they were part of a movement. This sense of belonging and shared mission drove engagement and the kind of innovation that propelled the company to become a leader in the industry.
Conclusion
Carrots don’t have a good return on investment, so avoid dangling them.
The limitations of incentive pay are clear. A quick fix will not maximize employee commitment, contribution, and engagement. By fostering a shared purpose, a unifying vision, and a keen sense of belonging, leaders can fully activate an essential element of a successful and sustainable business – people[2]. When employees believe in the ‘why’ behind their work, they are more likely to go above and beyond in their contributions.
The future of work is human-centric, and the organizations that recognize and embrace this will be the ones that thrive.
[1] Pervasive negative effects of rewards on intrinsic motivation: The myth continues
[2] Essential Dynamics is a framework for thinking through challenges and opportunities at personal, organizational, and societal levels. This framework is based on three essential elements: Purpose, People, and Path.
