Clients often ask how we motivate our staff members. The answer is simple, we don't. We feel good people are already motivated, what they need is removal of the things that de-motivate them. Things like unfair conditions, working with inferior equipment and supplies and being rushed to complete their work. At AGCO we do not use incentive pay schemes. Rather we pay top wages for our industry in the form of a salary. This is somewhat unusual in the auto repair business.† We feel this frees our staff to concentrate on doing a great job, rather than trying to earn a reward. Below is an article we wrote and submitted to the industry, on the topic.
Mice and Mountain Climbers, Some Thoughts On Incentive Pay
Behaviorist theory suggest that men may be managed [controlled] by well designed stimuli [rewards]. This is the basis of most incentive pay systems. On certain levels this theory seems to hold true, and much of the work has been backed up by experiments with mice. Placing cheese, in the proper places causes a mouse to run through the maze.
Men however, are quite different from rodents and do not always react the same with regard to rewards. Men are endowed with reason which other species lack. A man is capable of reasoning without regard to outside stimuli. A man also has compassion, character, pride and a sense of right and wrong. He is capable of acting in a manner that totally disputes behaviorist theory.
For example, a man may run into a burning building to save another. He does this because his compassion for another human overcomes the stimuli [fear] to save himself. A man may also forego reward, in order that others in the group [he feels part of] will have more, according to need.
The same holds true and often befuddles incentive managers, with regard to their employees. In flat-rate, for instance, a man is hired and promised, an amount of money for an amount of work. The more work, the larger the amount. The employee, initially excited at the prospect of reward, works very hard. He soon realizes that certain work does not result in the same amount of reward as other work. He also notices that many factors, outside of his control, affect the amount of the reward.
At this point he may react in a number of ways. He may try to avoid the lower reward work. He may attempt to manipulate the system so that he gets only the high reward work. He may see the system as unfair, and feel he is justified to "beat the system" in whichever way that he may or a multitude of other reactions.
In these instances his concentration is more on the reward than the job. He is being extrinsically motivated by the reward, though he may or may not consciously realize it. He is unlikely to feel a great deal of joy from the work that he does, rather the reward is the object.
Contrast this with a man doing what he likes, because it pleases him to do so. For example, a man may enjoy climbing mountains. This is his hobby, yet it is also a great deal of work. His reward is intrinsic, a feeling of accomplishment, joy in the challenge of a job well done.
He studies all that he can to learn more about mountain climbing. He practices and refines his techniques, constantly looking for ways to do the task better. He works very hard, yet is not drained of enthusiasm, in fact he is refreshed. He holds a sense of pride in his accomplishment and looks forward to his next opportunity.
Certainly I realize the mountain climber is having fun and the worker above is earning a living, and that is my point. The two need not be mutually exclusive. My experience has been, that if a man has his needs met, with regard to pay [has enough money to live comfortably] he is more free to concentrate on the joy inherent in a job well done.
I also believe this is a far superior state with regard to production, quality, efficiency and human relations than the one that commonly exist in the incentive driven system. It requires management that trust people to do what is best, rather than rely on a system of punishment and reward. It requires management that trust its own ability to share vision and remove obstacles to joy in work. Managementís job shifts from a controller of reward to a leader of an inwardly motivated team of people. People seeking to do their best, because it pleases them to do so.
I do not feel incentive pay is inherently bad, nor do I think it can be abandoned without instituting vision and leadership. It is merely not very effective in encouraging what I feel is the best in people.