There is a general perception that if you want someone to do great work then you add incentives to get the desired results. Incentives can be in the form of commissions to sales representatives or to project managers for the timely completion of projects or bonuses to senior managers for achieving the desired profits for the company. I remember even offering financial incentives to my young children when they were at school for getting the best grades.
In 1976, two economists, Michael Jensen and William Meckling published a paper called the IncentiveTheory: why don’t managers always behave in a way that is in the best interest of the shareholders? This became one of the most widely cited papers in the field of management which had to be literally committed to memory by students of the Ivy League business schools. In essence the paper stipulated that the interests of the managers must be aligned with that of the shareholders. That way if the profits go up, the managers are compensated better and this is a mutually rewarding arrangement for both the shareholders and the managers. Indeed, Jensen and Meckling’s theory is very much prevalent in the capitalist corporate world and has caused the skyrocketing compensation packages of executives in the western economies.
The question that often comes to my mind is whether such incentives are good or bad in the long run. Sure, they get people to work hard so that they can earn some extra income but do incentives motivate people? Can incentives make people happy? Well, there is another theory called the Two Factor Theory which challenges the Incentive Theory. Frederick Herzberg is perhaps the best know proponent of the Two Factor Theory and he argues that you can pay people to do what you want but that does not necessarily mean that they are motivated to do your bidding. True motivation is when people do something because they want to do it. Herzberg argues that this type of motivation should be the ultimate objective of any organization because it will work during good and bad times.
In 1968 the Harvard Business Review published an article by Frederick Herzberg titled, “One More Time, How Do You Motivate Employees?” To date this is the most requested article from Harvard Business Review. Herzberg asserts that in a job there are two distinct factors at play- the hygiene factor and the motivating factor. The hygiene factor relates to the position, the compensation package, job security, work conditions, company policies etc. Hygiene factors would also include for example, having a good boss who guides and assesses you fairly. Bad hygiene factors cause dissatisfaction among employees. Therefore, it is important for the company management to address and fix any bad hygiene factors that may exist.
Herzberg states that if a company has attractive hygiene factors, then at best you will have employees who are not dissatisfied. This does not mean that they would be satisfied. The opposite of job dissatisfaction is not job satisfaction but rather an absence of job dissatisfaction. In short, by providing good hygiene factors you can prevent an employee hating his job but you cannot make him love his job.
Motivators are the factors which make us love what we do. There are many examples of such work. Consider Medecins Sans Frontieres (Doctors without borders), a French non- governmental organization head quartered in Switzerland. It has almost 40,000 dedicated employees who work in the most dangerous places on earth with relatively meager earnings. What motivates these people is to serve humanity in distress. No amount of hygiene factors can provide the joy one gets out of doing humanitarian work.
Hygiene and Motivating factors do not have to be mutually exclusive. There are professions which have high hygiene and motivating factors but the motivating factor is the dominant one. Let us look at some of the world’s elite athletes. Superstars like Novak Djokovic or Christiano Ronaldo have all the money in the world. Yet they keep pushing themselves to the edge of human endurance day in and day out. Why? Surely it is not for the hygiene factors. They do it because they love what they do. They want to leave behind a legacy. I am absolutely certain that the greatest talents that we see today would not have reached their incredible standards of excellence if only money was being offered.
The greatest motivating factor is to be able bring good to the life of others. The best jobs are therefore in companies which offer this opportunity. I often tell people working in bti that we are fortunate to be working in an industry where we can make the life long dream of owning a home come true for so many people. It is a special day when our customers take handover of their cherished home. And it is also very natural for our employees who have been associated with these families for several years during the construction of the project to get overwhelmed by emotion on the handover date. Contrast this job with that of a young man working in a tobacco company. No matter how attractive the hygiene factors may be, does he sleep well at night?
Young people get waylaid by the lure of hygiene factors offered by many companies. At a younger age it is difficult to understand the nuance of the hygiene and motivating factors. By the time reality sinks in after a few years, it is too late to extricate oneself from that particular industry and start all over again in a new setting which may require a completely different skill set. The theory of motivation suggests that you change your career perspective. Instead of over valuing the material benefits, find out whether the job gives you a chance to bring good to people’s lives. Will the job give you a chance to do the things you enjoy doing? Will you be able to learn new things? Will you be allowed to bring out the best in yourself? Once you find such a job, the tangible material rewards (hygiene factors) will not be so important because you will be “happy”.