Why Does An Incentive Structure Work In Corporations?

Posted on

The basic functioning of human interactions in the workplace, or, “the human task exchange,” can be explained by the psychological theory known as “motivation theory.” Thoughts on human response to workplace and personal tasks is described in terms of “intrinsic” and “extrinsic” motivation. Intrinsic motivation is that which we all do because it’s purely enjoyable – play tennis, cycle, play cards – any number of things that have spawned the industry that produces those auto license plate holders that read: “I’d rather be fishing” . . . or, “biking,” “flying,” “shopping.” These license proclamations best capture the notion of intrinsic motivation – we engage in activities, for ourselves for the pure enjoyment of the experience.

Extrinsic motivation is that that prompts us to perform an act, or a task, because we get something “out of it,” not necessarily because we would do it for the simple pleasure of the experience. “A day’s work for a day’s pay” is the most classic representation of extrinsic motivation — we do the work because we get money by doing so. However, as we all can recognize, both from our own experiences and those of others, simply deriving a paycheck for the work that we do for organizations is not enough to keep us going back each day, and certainly not sufficient to keep our interest and our productivity level maintained. Something more needs to be present than that of the money-for-pay exchange, that begins to become “routine” after the first few pay periods.

Therefore, tapping into an extrinsic motivation schema is necessary in the workplace. This is so because, while the pay was the original motivating factor of the job, its attractive elements are quickly lost as the job’s features become routine and pedestrian. The work tasks, therefore, must be constantly buoyed up with additional extrinsic motivators, or, what we’ll call “play tasks,” for the purpose of this article. (The term “play tasks” depicts how a typical employer reacts to the notion of providing serious extrinsic motivators for employees. Just watch – you’ll have the same reaction!)

To return to our discussion on arranging for a typical “work/play” day, here’s how it’s done. You must first determine what sort of things you can offer your professional-level employees – some examples are: half-days on Fridays; an hour of gym work freely interspersed through the day; an hour’s massage; work with a personal trainer; one-hour on-site classes that increase professional skills; flexible working hours based on tasks assignments; and so on. One good way to derive this basic list of offerings is to ask your professional staff what they’d most like to have interspersed into the work environment. The list of staff suggestions is then compiled, and the employer selects the “play tasks” (PTs) that can most reasonably fit into a typical day’s work requirements.

Once the list has been refined to the final selection of PTs, the manager sits down with individual employees to develop a compact. This agreement constitutes how the employee plans to structure his/her time during the workday. And, while this compact should monitored to ensure that the employer is getting due diligence paid to work tasks, it should not be approached as a “hard and fast” agreement – the idea is to have the employee feel that he/she has some freedom of action to incorporate some interesting/relaxing time into the regular routine of the work day. It is, therefore, an acknowledgement on the part of management, that the process of creating an integrated “work/play” day has your blessing. And, yes, there will need to be a wide-array of options, because: 1) any one single “motivational factor” might lose its intrigue over time, just like the paycheck; and 2) any, one, motivational factor will be of interest to one professional employee and not to others.

To fully understand why we’re talking about PTs and WTs [work tasks], as interspersed events and the power of this approach, let’s take a step backward, and look at how we have developed into working adults. When you were a child, were you told that if you finished your dinner, you could have dessert? Or, that if you finished your homework, you could go out to play? These rewards constituted your first involvement with an incentive structure. The pleasures known to both adults and children are incentive structures that are composed of a two-stage process: one, that the individual first must face a relatively unpalatable, yet necessary, task; and, two, that something of an infinitely more wonderful nature awaits once the task is completed. Organizational arrangements of incentives for adults seek to build on one’s early influences and to design a series of “corporate pleasures,” as it were, that are so appealing that they make the performance of the work task relatively painless, when contrasted in one’s mind to the pleasure that awaits.

But, let’s look at what actually happens in today’s organizations . . . what pleasures are there, really? Well, you might say, there are the coffee breaks; there’s the office holiday party; there’s the gym that can be used before or after the work day . . . WOW! Are these the things that will actually drive (that is, motivate) employees to work their hardest! Well, then, you say, there’s the paycheck . . . that’s what people really work for! Is that really so? The psychological theory of human motivation, you’ll remember, tells us a very different story: that there are very few intrinsic motivators. And, that most work motivators have to be structured as extrinsic motivators that are disguised as intrinsic motivators, or that are immediately followed by tasks that are intrinsically motivating (that is, pleasurable), just as when we were all children.

This tells us, therefore, that everyday work in an organization should be structured so that each day represents an alternating series of “work tasks,” followed by “play tasks.” And, if some work tasks are of a full day’s duration, then the pattern becomes one day of work tasks, followed the next day by two or more hours of play task(s). It’s very important, even with adults, that the reward immediately follows the work task. Adults aren’t much better than children at delaying rewards. But, take a look at our most typical reward (other than the paycheck) in the business world. This reward is called the “vacation” and goes like this: “If you work really hard for 11 months and one week, you can enjoy three weeks’ vacation.” What an incentive! Those who arranged this scheme for employee rewards were not thinking in motivational terms! This is probably because the current rewards structure that is used in modern organizations was designed almost a century ago – long before we understood the motivating forces of human behavior; and long before we had professional staffs, or, “knowledge workers,” as Peter Drucker terms them. The “dated” nature of our corporate rewards system speaks to a serious need to reconsider employee incentives and rewards.

In thinking further about my proposal that more modern-day rewards structures be designed and that these take the form of trade-offs, during the work day, or, at least during the work week, between work tasks and more personally pleasurable tasks, you will likely ask, “How could this high level (ratio) of switch-offs between work tasks and play tasks possibly be done and keep productivity up?” The answer is simple and has been around in our management research literature for almost 15 years. In a nutshell, the phenomenon is that given more interspersed rewards (that is, WTs, followed by PTs) such as:

1) Friday afternoons off;

2) Wednesday mornings off;

3) flexible work schedules [where the employee can build in his/her own series of work/play tasks];

4) “vocational vacations:” or

5) working 75% of the time – All of these approaches have been shown to increase productivity, dramatically, from those of the levels achieved by current rewards structures.

The explanation of why this works is simple: when a professional worker faces any given workday, s/he will have two or, at the most, three major tasks that must get done that day (you can chart this for yourself, and discover that it is true). However, because this employee (we’ll call him “Fred” to simplify the story) must put in a “full” workday to satisfy both his contract and his boss, he approaches each work day with these 2-3 tasks in mind that are to be accomplished (the WTs), and he then looks for ways to fill in the rest of his time around these major tasks. For example, he surfs the ‘Net; or he chats with colleagues and fellow workers, going from cubicle to cubicle, and from building to building; or he talks on the telephone, doing inconsequential items of business and/or his personal business with family, stockbroker, friends; or he goes on non-essential errands; or he takes as many long [“business”] lunches as he can manage.

These “make work” ploys will be easily recognizable in the habits of almost all professional employees. In other words, Fred is going to “pad” the time in his day that surrounds his legitimate work task production with non-essential, “upkeep” tasks that serve to fill in the prescribed hours in a business day. The most unfortunate thing about this process is that Fred will likely derive no real pleasure or very little personal or professional benefit from the “padded tasks” — he’s just learned to be creative at finding things to fill up the allotted time called a “work day” because his mental and physical well-being specify that he cannot work a full standard day nonstop in the performance of demanding and draining mental tasks. Work days of professionals require a “replenishment” of mind and body if things are to continue to be done well. That means that there is a recognized need for work scheduling to be handled in a way that is consistent with human requirements and constraints. It also informs us of a shocking secret – professionals cannot maintain quality levels of thinking, creativity and productivity for unending and unlimited amounts of time! If we believe that the professionals in our organizations can do rigorous, hard-driving days while maintaining a consistent and quality level of performance in all tasks, we are indeed deceiving ourselves. This is why our staffs are driven to carry out “down-time” tasks – it allows the regeneration that is needed within the course of a business day to rebuild energy and drive to complete the next big task. So, between each of the three big tasks of the day, one can assume that there will need to be one hour of down time required for each productive task period of one and one-half to two hours.

A far more productive way to manage the work day/week for our professional employees, therefore, is to collude with them in designing an individual work schema, for each employee – we have individual performance objectives, after all – why not build in a design for the conduct of each individual’s personal work day arrangement, as well. This schema should allow each employee to maximize both “work” and “play” times. In order to get to this point, we must first come to the difficult realization that relates to our earlier discussion — our employees are going to take the “downtime” during each day,

anyway. But the standard quality “downtime” will be far less of the needed “play/pleasure” [intrinsic] quality, and, therefore, far less satisfying to the employee. And, it will ultimately be far less satisfying to those of us who manage the organizations, as well. The current process of rewards, which goes on day after day, in our “modern” organizations, regularly leaves our employees far less satisfied, overall. The effect of this dissatisfaction is that we, as managers, share in the general sense of dissatisfaction and “incompleteness” of the workplace environment. And, we consequently experience the costly turnover of employees (who seek change), as well as other costs, that are associated with our current rewards practices.

That leaves us with one option for motivation that has been only modestly explored in modern organizations – that is the compact for more meaningful workdays. If we participate with our employees in selecting those “play times” that I’ve described (you can name them anything you’d like if you find it discomforting to talk in terms of “play” within the work environment), you’ll find that your employees will truly enjoy the total work experience. You will, in fact, be providing them with a more satisfying work experience, and you’ll be providing your organizations with the assurance of a higher level of functioning and productivity.


The truly unfortunate reality of our modern management practice is that we often see managers in organizations fighting the urge of employees to structure their own downtime during the course of a workday. In the course of our consulting practice, we have observed managers who just “happen” to call a noon meeting when they have learned that employees had planned for lunchtime events. How outrageous is that behavior? It seems that we have, more often than not, observed managerial behaviors that act in opposition to rather than in support of well-meaning employees and their needs. This practice, of course, is the mark of a dissatisfied manager and is the result of a “quietly dysfunctional” organization – where there is deteriorating colleagial and company loyalty, and, ultimately, lagging productivity. I would challenge you to look at your own professional staff and think carefully about what their reward needs might be. Reward yourself by providing others with better ways to enjoy a sense of fulfillment –Your company will certainly prosper as a result.

Leave a Reply

Your email address will not be published. Required fields are marked *