Pawel Brodzinski on Leadership in Technology

Whatever it takes to lead a team, build a product, and run a business

Tag: motivation

  • What LEGO Can Teach Us about Autonomy and Engagement

    What LEGO Can Teach Us about Autonomy and Engagement

    Last time, I built the connection between distributed autonomy (or lack thereof) and engagement (or lack thereof). Admittedly, I drew from different sources, and one could question some claims or connections I made.

    So how is it, really? Do we really feel more engaged when we have more control over the work we do?

    I have the privilege of running the course on progressive organizations in all sorts of settings, from MBA programs, through postgraduate studies, to professional training. As a part of the course, I designed a little experiment to run with all those different crowds. Over the years and across contexts, it keeps telling the same story.

    What Can LEGO Teach Us About Autonomy?

    The experiment is fairly simple. I get a group of people to build a relatively simple LEGO set. Twice.

    The Managed Build

    The first run is well-organized. We pick one team member as a manager, who starts by assigning tasks to the rest of the team. A typical team member’s job would be to:

    • Be responsible for a specific type or color of pieces.
    • Build a particular part of the model.
    • Etc.

    Over the years, I experimented with how much freedom a group’s manager has in organizing work. It doesn’t seem to matter. What’s important here is that the whole work organization is designed by—and, to a degree, enforced by—a single person.

    page from build instructions for lego catamaran model

    Then they get to build a catamaran. With instructions. Displayed on a screen. With me controlling the pace. Actually, it’s they who control the pace. I “flip” the page once the last team is ready.

    Eventually, all the teams build perfect catamarans. Up to specs. There are some subtle challenges in the process, but that goes beyond the context of autonomy versus engagement.

    lego model of catamaran

    The Self-Organized Build

    The second run is different. There aren’t managers anymore. There is no task assignment pre-building. The whole instruction is: “Self-organize.”

    There is no instruction either. The only thing a group gets is the picture of a hydroplane they’re building.

    lego model of hydroplane

    People have all the freedom to organize their work. Sometimes they do plan. Much more often, they don’t. A creative and messy process commences. Inevitably, it’s all louder and more chaotic than the first run. On average, it’s a bit longer, too.

    Eventually, I get my hydroplanes. Some of them perfect. Others not so. However, I’m yet to receive one that differs from the picture in anything other than minor details.

    The Lesson

    While there are many facets to this experiment, the big lesson is about engagement. After each run, I ask everyone individually to assess their engagement during the task on a scale from 1 to 5:

    1. Very low
    2. Rather low
    3. Neither low nor high
    4. Rather high
    5. Very high

    The underlying hypothesis is, of course, that the second run, the one where people have more autonomy, yields better engagement.

    Across all the teams that have ever participated in the exercise, the current running averages are:

    • 3.24 for the managed build
    • 3.94 for the self-organized build

    There wasn’t a single experiment in which teams were less engaged in the second run (though in one case the results were close—0.14 difference).

    In other words, I’m yet to see a group of people who would be less engaged in a creative LEGO build when they were given more autonomy.

    Some Experiment Caveats

    One important aspect of the experiment design is that the models are relatively simple, while I organize people in groups of 4 or 5. As a result, there are too many hands for the task. It is so by design. It’s an environment where it’s relatively easy for people to disconnect, should they choose to.

    Also, it’s LEGO. For some people, it will be inherently engaging no matter what. They tend to take an active part in the first run, disregarding their assigned role.

    Those two aspects of the game create an environment in which people use the full scale when assessing their engagement. I’ve only had one group that hasn’t used 1s at all. Possibly too many AFOLs in the room.

    The pace of flipping the instruction pages in the managed build tends to be a minor source of frustration for faster teams. Again, that’s by design. It’s just another dimension of limited autonomy. After all, with real work, we have all sorts of interdependencies.

    A side note: Interestingly, it’s not always the same team that is the slowest throughout the whole run. It’s a classic case of a shifting bottleneck.

    Distributed Autonomy Is a Crucial Prerequisite for Engagement

    My working hypothesis is that the main reason behind appalling engagement levels is limited autonomy. The theory suggests as much.

    global employee engagement 2009-2024
    Source: Gallup’s State of the Global Workplace

    The LEGO experiment is a neat way to confirm that in practice. With a simple change of giving people more autonomy, the declared engagement goes up by more than 20%.

    The observable behaviors are different, too. The managed build generates way less energy, fewer discussions in teams, less movement across the room. If you saw randomized silent movies (no audio) from the respective experiment runs, it would be obvious which is which.

    Distributed autonomy—being able to decide how we work—is an absolutely crucial aspect of our workplaces. And a prerequisite for high motivation and engagement.

    This is part of a short series of essays on autonomy and how it relates to other aspects of the modern workplace. Published so far:

    I’m writing these posts by hand. Like an animal.
    웃https://okhuman.com/NbZHoQ

  • Limited Autonomy Is the Main Reason for Low Engagement Levels

    Limited Autonomy Is the Main Reason for Low Engagement Levels

    I like the following quote from Gallup’s State of the Workplace. It’s from the 2023 report, but it didn’t lose any relevance.

    After dropping in 2020 during the pandemic, employee engagement is on the rise again, reaching a record-high 23%.

    Yup, it reached a record high in 2022, stayed there in 2023, and dropped again in 2024.

    global employee engagement 2009-2024
    Source: Gallup’s State of the Global Workplace

    We had COVID-related uncertainty to blame for the drop last time. This time it’s AI-related uncertainty. Here’s a thing, though. We discuss marginal changes. A per cent here, a per cent there.

    The big lesson remains the same. Engagement levels in the modern workplace are appalling.

    If it were a football team (a soccer team for my American readers), it would be as if 2 players tried to win, 7 just moved around without much engagement, and 2 more tried to score an own goal. If you’d rather take a basketball metaphor, you get one baller who tries to win, 3 who fake defense, and one who keeps turning the ball over to the other team.

    The only hope of actually winning is that the other team is about as disengaged as yours.

    These are realities we have lived with in the past decade. Before that, it was even worse.

    Autonomy, Mastery, Purpose

    So why is the engagement so low? I like Dan Pink’s answer. In his classic book Drive (and no less classic TED talk: The puzzle of motivation), he points 3 prerequisites for high motivation.

    • Autonomy. The ability to decide about important aspects of the work we’re doing.
    • Mastery. Being able to work according to our own aspirational quality standards and get better at what we do.
    • Purpose. Having a shared goal with a broader team or group, we collaborate with.

    Remove either, and you remove the conditions for engagement. Since we have a motivation gap, at least one part of the trio must be the culprit.

    Purpose tends to be relatively individual for companies. You can probably instantly think of organizations that are purposeless (take any that have “increasing value for shareholders” painted all over the place) as well as those that are purposeful.

    Mastery is trickier. However, in the context of knowledge work, I see a one-way correlation between autonomy and mastery. If you can make all relevant decisions about how you work, you very likely can work according to the aspirational standards you set for yourself. If you have autonomy, you can have mastery, too. The vice versa is not necessarily true.

    So yes, when I have to explain Gallup’s results, I blame autonomy, or rather, lack thereof.

    Hierarchy Discourages Autonomy Distribution

    In a modern corporation, we perceive hierarchy as the only possible organizational paradigm. Hierarchy here is understood as a decision-making power distribution structure. The higher up you are in a hierarchy, the more (and more important) decisions you can make.

    Sadly, that very structure discourages us from distributing autonomy to lower levels. If I hypothetically allowed my team to make the decisions assigned to me, inevitably, I’ll face a situation where someone makes a decision I disagree with. Then I face two choices, both bad.

    I can stick with the decision that goes against my experience, intuition, and better judgment. However, since it was mine to make, I’ll be responsible for its outcomes. If my experience, intuition, and judgment were any good, I would pay the consequences of a mistake, even though I knew it was a wrong call in the first place. Psychologically, it’s a tall order.

    The other option is to change the decision. In one swift move, I fix the decision and show my team that they didn’t have any autonomy in the first place. They could “make” decisions only as long as these were decisions I would have made anyway. If that sounds like a kick in the teeth, it’s because it is.

    Hierarchy discourages managers from distributing autonomy. Add to that how prevalent this organizational model is, and we have an answer to why engagement in the modern workplace sucks big time.

    The Writing Is On the Wall

    No matter which vantage point we choose, we see the same picture.

    • We cheer appalling engagement levels only because they’re slightly better than they were.
    • We listen to Dan Pink’s rants with awe, then go back to the same old solutions that never worked.
    • We applaud stories of bold leaders who challenged the status quo with stunning results, and rationalize them, saying, “It would have never worked in my company.”

    I’m curious, how well your current “solutions” work? If we believe Gallup data, there isn’t much to brag about. On the one side, we have unquestioned dogma, which we have followed for more than a century. On the other, we have science. In such cases, I tend to pick team science.

    This is Dan Pink again:

    “This is one of the most robust findings in social science, and also one of the most ignored.”

    “There is a mismatch between what science knows and what business does.”

    The writing is all over the wall. And it will only get more pronounced as we surrender parts of our autonomy to AI agents. Let’s not expect fundamental changes in our motivation levels.

    Unless we start treating the autonomy gap seriously, that is.

    This is part of a short series of essays on autonomy and how it relates to other aspects of the modern workplace. Published so far:

    This post has been human-created: 웃https://okhuman.com/g8lX5w

  • Agile Self-Organization: Band-Aid for a Broken Leg

    One of the concepts that has been widely popularized by Agile movement is self-organization of teams. It lands very nicely in any Agile context, no matter the discussed method or even a general approach one might have to Agile implementations.

    It is, after all, an idea that appeals to line employees and managers alike. Let’s give atomic teams power to decide how they would work within safe constraints. Safe here means safe for managers, of course. In one swift move we address, at least to some point, two issues. One, we increase empowerment across team members as they get more say over how they work. Two, we remove managerial burden of work organization at a the most detailed level, at which managers’ competence can frequently be challenged.

    All but the most micromanagerial types should be satisfied.

    Since how the work gets done is decided closer to where it actually gets done, we increase odds of good processes and policies. At the same time, through more autonomy we improve motivation and engagement.

    It’s not without a reason that self-organization at a team level got its way into common practice.

    History of Agile (Oversimplified)

    The starting point for self-organization as a technique or a practice is not unlike other agile practices. Early Agile methods were focused on a team. The perspective might have differed, but the atomic entity in consideration was always a team. Be it Scrum, XP, Kanban or anything else, in their early forms there was little mention on interoperability across teams either horizontally or vertically.

    Obviously, once Agile got traction there was a need for scaling the approach up. Initially, some makeshift approaches were being made to do that (anyone remembers Scrum of Scrums?). Eventually, whole methods were built to enable large scale Agile implementations—SAFes and LeSSes of this world.

    These approaches were built around a core method, typically Scrum, and took good parts of other methods whenever authors saw fit. Fundamentally, the value added of these methods was in a description how to roll everything out in a big organization. The desired outcome would be to see the core method implemented in multiple teams while ensuring some level of alignment across an organization.

    It was about scaling up the method and not scaling up the principles behind. It was about getting more Scrum / Kanban / whatever teams in an organization and not figuring out how the basic values and principles would have to work if they were applied on different levels of an organization.

    That’s exactly when we petrified self-organization as a technique relevant to a team and a team only.

    The Broken Leg

    Let’s look at the problem we are solving with self-organization. We give people autonomy and they organize work better as they are most knowledgeable how the work can be done optimally. At the same time, since we distribute autonomy, we increase motivation and engagement.

    So far, so good. I can’t help but ask: are these problems exclusive to the lowest levels of organizations, i.e. atomic teams, or are they more endemic?

    There’s no reason to think that the disease isn’t wide-spread. After all, for a century we are perpetuating Taylor’s and Ford’s ideas of separating the workforce from workflow design. It doesn’t happen on the factory floor only but throughout the whole hierarchy. A higher rank designs how lower rank works and what is expected of them. It is, in fact, the hierarchy itself that discourages us to distribute autonomy more than absolutely necessary.

    What we are looking at is not just a marginal problem of line employees going shallow into the higher ranks. The injury is not a scratch but a broken leg.

    The Band-Aid

    Despite how widespread the disease is the solution we have is far from enough: self-organization… but just at a team level. It is exactly the proverbial band-aid for a broken leg. It does the work, i.e. stop the bleeding, but only as long as the injury is skin-deep.

    We know it’s not the case.

    And yet we keep curing our broken organizational leg with just more band-aids of atomic teams embracing more autonomy. At the same time, we don’t address the structural problem of lack of autonomy throughout the hierarchy.

    There lies the root cause of the problem. Working only on the lowest possible level, i.e. teams, we already have hard constraints of how far we can go with autonomy (and it’s not far really). Unless we start working on self-organization systematically, we won’t get much long-term effect in an organization. It would be just one more band-aid.

    The Cure

    We got principles missing when we were figuring out how to scale Agile up. Interestingly enough, it had long been figured out in the military. Even more curious, the problem had been solved with tangible practices and not with some vague aspirations. The difference is that the military practices were designed as scalable from the very beginning.

    Take briefing and debriefing as an example. It is a pair of activities of sharing the goals and the context (the orders) by an officer to a unit and having the unit brief back to the officer what they understood. The goal of briefing and debriefing is for any rank to make sure that: a) a lower rank unit understands the goal (the purpose) of a higher rank officer and one rank above, and b) a lower rank unit understood correctly what was briefed.

    Such a practice is rank-agnostic. It can be applied at any level of a hierarchy without any specific adjustments. It is entirely not so with Agile self-organization practices that were immersed in 7 plus or minus 2 people as a definition of a team.

    If we aspire to see organizational transformations that would be an equivalent of turnaround of some of our teams, we need to reinvent self-organization. Autonomy distribution must become either a rank-agnostic practice or it has to have dedicated solutions for each organizational level.

    The former, while much harder to design and implement, is potentially much more applicable. It is the domain where tools such as decision making process, open salaries, or inclusive hiring process reside. The meta pattern here is that by default any decision is made after collective advisory process and at a lower level that it would have been made otherwise.

    I acknowledge that these examples may sound radical. They are, indeed. And yet adjusting them to a softer form is straightforward. It doesn’t have to be that anyone can decide about anyone else’s salary. It can be that anyone can decide about anyone else’s salary within their team and in accordance with budget constraints. What matters is that the decision is made at a lower level (a team mate and not a manager) and the whole team is invited to take part in the process.

    Such a change won’t happen overnight. Even in a small organization it likely requires years and not months to implement. However, unless there is a motion toward that direction, we are just paying lip service to self-organization and apply more band aid to broken legs.

  • Lack of Autonomy: The Plague of the Modern Workplace

    Radical Self-Organization is a way I tend to label organizational design that we adopted at Lunar Logic. It’s been dubbed The Lunar Way too on occasions. Anyway, it draws from different approaches to design organizational structure in a very flat, non-hierarchical way. Describing what we do is probably worth a separate post on its own, yet this time I want to focus on one underlying principle: autonomy.

    Our evolution toward Radical Self-Organization was experimental and emergent. Initially we didn’t set a goal of distributing authority, autonomy, and all the decision-making power across the whole organization. It emerged as a sensible and possible outcome of further evolution on the path we set ourselves onto. This means we were figuring out things on our way and quite often explored dead-ends.

    The good part of such approach is that, we wanted it or not, we needed to understand underlying principles and values and couldn’t just apply a specific approach and count on being lucky with the adoption. No wonder that on our way we had quite a bunch of realizations what was necessary to make our effort successful.

    One of the biggest of such realizations up to date for me was the one about autonomy.

    A traditional, hierarchical organizational structure that distributes power in a top-down manner is ultimately a mechanism depriving people of autonomy.

    Let me explain. Top-down hierarchy addresses challenges of indecisiveness and accountability. We ideally always know who should make which decision and thus who should be held accountable for making it (or not making it for that matter). So far so good.

    The problem is, that the same mechanism discourages managers throughout a hierarchy to distribute the decision-making power to lower levels of organization. After all, if I am held accountable for a decision, I prefer to make the final call myself. Even if I end up being wrong it’s my own fault and I don’t suffer for mistakes of others, i.e. my team.

    In short, as a manger in a traditional structure I’m incentivized to double-guess and change the decisions proposed by my team even if I go as far as consulting my calls with the team. In other words, I am discouraged to distribute autonomy.

    This has fundamental consequences. Autonomy is a key prerequisite of being motivated at work. Lack of motivation and disengagement is a plague at modern workplace. In 2013 Gallup reported that worldwide only 13% of employees were engaged. We can’t expect our team to be creative, highly productive and responsive to ever-changing business environment when they simply don’t give a damn.

    And it’s not teams’ fault. We create systems where autonomy, and as a result engagement, simply is not designed in.

    It’s not managers’ fault either. We set them up in a structure where they are punished for distributing autonomy.

    The biggest problem is that hierarchical structure is a prevailing management paradigm, which we are taught from the earliest contact with the education system. The very paradigm is the plague of the modern workplace.

    There is one important side note to mention here. Autonomy doesn’t equal authority. The two works well as a pair but neither is a prerequisite to have the other.

    I can give people authority to make project related decisions, e.g. that we terminate collaboration with a client. They can formally do it. However, if I instill enough fear of making such a tough call so that everyone is too afraid to do so people won’t have autonomy to make such a decision.

    On the other end, we may not distribute authority formally, but we may live up to the standards of “what’s not forbidden is allowed” and may believe that “it’s easier to ask forgiveness than it is to get permission”. In such an environment people will be making autonomous calls even if they don’t always have authority over the matter.

    Coming back to the argument about disengagement, it’s about lack of autonomy, not lack of authority. In other words, simply giving people power to make some decisions won’t solve the issue. It’s about real autonomy, which unfortunately is so much harder to achieve.

    If we agree that lack of autonomy is the problem we have quite an issue here. Since the root cause of the problem goes as deep as to the way we design organizations. Changing how we think about the domain is a huge challenge.

    The other day I was reading an article that mention a guy who opened a branch office in another city and let it run as a Teal organization with no managers and huge autonomy. His summary of his own story was something along the lines: there are 30 people with no management and they are doing great, but I think by the moment there are 50 of them we’ll hire a director.

    This shows how strongly we are programmed to think according to old paradigm. It’s like saying “it’s going great, let’s kill it because, um, my imagination doesn’t go as far to imagine the same thing in a slightly bigger scale.”

    It also shows how big of a challenge we are about to face. Simply changing how the power is distributed in an organization won’t do the trick. Unless such a change is followed with the actual change in power dynamics, enabling autonomy in lower levels of an organization it would simply mean paying a lip service. The most difficult change that needs to happen to allow for such a transformation is the one happening in the mindset of those in power, i.e. managers.

    That’s bad news. If we consider power as privilege, and I do perceive it so, it means that many managers would be oblivious to the notion that they are somehow privileged over others. It means that we first need to work on understanding of domain. Once there, there’s another challenge to face: giving up the privilege. It can’t just be done by setting up different roles. That would be simply distributing authority and that is not enough.

    The real game changer is distributing autonomy: the courage to make decisions even when—especially when—a decision would go against manager’s judgement. After all, the plague of the modern workplace is not lack of authority, but lack of autonomy. Without addressing it we should neither expect high motivation levels nor high engagement.

  • Hierarchy Is Bad For Motivation

    Whenever a topic of motivation at work pops up I always bring up Dan Pink’s point. In the context of knowledge work, in order to create an environment where people are motivated we need autonomy, mastery, and purpose.

    The story is nice and compelling. However, what we don’t realize instantly is how high Dan Pink sets the bar. Let me leave the purpose part aside for now. It is worth the post on its own. Let’s focus on autonomy and mastery.

    First of all, especially in the context of software development, there’s a strong correlation between the two. Given that I have enough autonomy in how I organize my work and how the work gets done, I most likely can pursue mastery as well. There are edge cases of course, but most frequently autonomy translates to mastery (not necessarily so the other way around though).

    The problem is that the way organizations are managed does not support autonomy across the board. Vast majority of organization employs hierarchy-driven structures. A line worker has a manager, that manager has their own manager, and so on and so forth up to a CEO.

    The hierarchy itself isn’t that much of an issue though. What is an issue is how power is distributed within the hierarchy. Typically specific powers are assigned to specific levels of management. A line manager can do that much. A middle manager that much. A senior manager even more. Each manager is a ruler of their own kingdom.

    Why is power distribution so important? Well, ultimately in knowledge organizations power is used for one purpose: making decisions. And decision-making is a perfect proxy if we are interested in assessing autonomy.

    Of course each ruler has a fair level of flexibility when it comes to decide how the decision-making happens in their teams. There are, however, mechanisms that discourage them to change the common pattern, i.e. a dictatorship model.

    The hierarchical, a.k.a. dictatorship, model has its advantages. Namely it addresses the risks of indecisiveness and accountability. Given that power is clearly distributed across the hierarchy we always know who is supposed to make a decision and thus who should be kept accountable for it.

    That’s great. Unfortunately, at the same time it discourages attempts to distribute decision-making. As a manager I’m still kept accountable for all the relevant decisions made so I better make them myself or double-check whether I agree with those made by a team.

    This in turn means that normally there’s very little autonomy in hierarchical organizations.

    It brings us to a sad realization. The most common organizational structures actively discourage autonomy and authority distribution.

    If we come back to where we started – what are the drivers for motivation – we would derive that we should see really low levels of motivation out there. I mean, vast majority of companies adopt the hierarchical model as it was the only thing there is. Not only that though. Even within hierarchical model we may introduce a culture that encourages autonomy, yet very, very few companies are doing so.

    We could conclude that if the above argument is true we would expect really low levels of motivation globally in the workforce. It is a safe assumption that high motivation would result in engagement and vice versa.

    Interestingly enough Gallup run a global survey on employee engagement. The bottom line is that only 13% of employees are engaged in work. Thirteen. It would have been a shock if not the fact that we just proposed that one of the current management paradigms – a prevalent organizational structure – is unsuitable to introduce autonomy across the board and thus high levels of motivation.

    In fact, active disengagement, which would translate to being openly disgruntled, is universally more common that engagement. Now, that tells a story, doesn’t it?

    What we look at here is that modern workplace is not well-suited for achieving high motivation and high engagement of employees. There are certain things that can change the situation within structural constraints. There are good stories on how to encourage the right behaviors without tearing down the whole hierarchy.

    It is also a challenge for a dominant management paradigm that makes a rigid hierarchy a prevalent and by far the most popular organizational structure out there. While such hierarchy addresses specific risks it isn’t the only way of dealing with them. The price we pay for following that path is extremely high.

    I for once consider that price too high.

  • Why Bonus Systems Don’t Work

    The last time I shared my advice on how to fix a bonus system it was something along the lines “get rid of that crap altogether; it is beyond any repair.” The system I’ve just mentioned wasn’t extraordinarily flawed – an incentive money system in the company next door can work exactly like that one.

    Still, get rid of that crap.

    It may even be way above average bonus system.

    Get rid of it.

    It doesn’t work. It can’t.

    OK, let me start with a confession. Throughout my career I designed a couple of bonus systems. For quite a lot of time I was a firm believer that this is the way to go. The simple observation that every single bonus system I’d seen was flawed big time was more a motivation to finally get it right than a source for doubts that we may be trying to do the wrong thing righter.

    Eventually I started questioning the role of money as a motivational mechanism. Dan Pink’s TED talk is a classic on this subject.

    OK, I get the message already. Money doesn’t motivate. It doesn’t mean that it doesn’t yield positive outcome. I mean, it makes people happier, doesn’t it?

    Well, sort of.

    I think we should start with how people perceive the money they get. Is $100 worth the same for everyone in a team? I guess we all sense that this isn’t the case.

    “People’s choices are based not on dollar values but on the psychological values of outcomes, their utilities.”

    ~Daniel Kahneman

    In other words everyone may translate $100 to something different. In fact, I might have been happy with such a bonus last year but now, since my salary is higher, I’d need to get higher bonus to be equally happy.

    It basically means that we just can’t get the incentive money distribution right. Depending on who performed best, a different amount of money would be needed to make people feel equally happy. At the same time it means that people who performed equally well should get different bonuses because they have different concepts of utility. That just doesn’t feel right.

    By the way this is exactly why we typically speak about money in terms of percentages, not the absolute values. “I got 10% raise,” not “I got $100 raise.” The former gives at least some insight how much I value the raise.

    That’s not all though.

    “For financial outcomes, the usual reference point is the status quo, but it can also be the outcome that you expect, or perhaps the outcome to which you feel entitled, for example, the raise or bonus that your colleagues receive.”

    ~Daniel Kahneman

    Even bigger problem is with the reference point we use. Not only is it about how much I value $100 but also how much I expect I deserve. In other words, in a normal situation I might have been totally happy with $100 but I know that everyone around is getting $500. This means that it is suddenly only $100 and I’m going to feel miserably.

    There are many drivers to what we consider the reference point. One very interesting thing is that after a couple of situations when I got bonus money it becomes the new normal. I expect to get it again. I doesn’t matter that my performance in the next project wasn’t that stellar anymore. My reference point evolved.

    Believing that, in this case, incentive money is still completely optional and the default situation is that I don’t get any is just fooling oneself. In fact, every fat bonus I get simply makes me adjust my reference point. It isn’t something managers would like to see I guess.

    Unfortunately, it’s even worse than that.

    My reference point may change the utility of a bonus I get to negative values. I would consider outcomes that are better than the reference point as gains. Those that are worse than the reference point are loses. In other words if my status quo is set at $500 and I got only $100 I feel like I’ve lost $400. Someone paid me money just to make me feel miserable. Congratulations!

    “The happiness (people) experience is determined by the recent change in their wealth”

    ~Daniel Kahneman

    Considering the fact that change in the wealth isn’t measured in absolute numbers but against the reference point I see two ways to keep people happy. One would be to pay them more and more every single time, because then we don’t need to care about their raising expectations. Another one would be to set expectations on a constant level and focus on all the other happiness drivers that are available.

    I don’t think I need to mention how much “brilliance” is in the former idea. The latter means no bonus system at all.

    We can’t make bonus system right. The best we can do is damage control. The obvious follow-up question would be: so why the hell are we spending money to make people unhappy and harm our organization?

    One common answer I hear is that getting rid of bonus system would make people unhappy too. Oh yes, it will. I mean you’ve set that expectance that people would get bonuses. You’ve changed their reference point. Yet still the choice you have is between keeping (most) people unhappy in the long run (and continuously paying for that) and getting rid of the dysfunctional mechanism. The latter may be painful in a short term but at least that’s one-time change.

    So yes, this is my advice: get rid of that crap altogether.

    When you think how people perceive money you understand that no matter how hard you try you’re not going to make it work.

  • Why Money Doesn’t Motivate

    I touched money and motivation subject recently. Since the post generated quite a discussion it seems the subject is important for many. It also seems many people disagree with the opinion that money doesn’t really motivate which is nice since it gives me excuse to beat the dead horse again.

    In short my points were:

    • Money is more a hygiene factor than a motivator.
    • When you pay less than some healthy level expected by people they start looking for a job.
    • As long as you match people’s comfort level they get, or don’t get, motivated by non-monetary factors.

    I received a number of counterarguments in comments, which I’ll try to address here. I’m aware I overstate bit here and there but that (hopefully) doesn’t change validity of arguments.

    Money does motivate people (and go sell your crap somewhere else)

    A nice thing about Dan Pink’s TED Talk is that he’s making a case. He brings arguments – studies made all over the world – to prove the point: money doesn’t seem to make people work better. Now, I haven’t looked very hard to find research studies which prove the opposite, but maybe you can redirect me to them. For now I consider it is 1:0 for Dan’s team.

    I saw teams whose productivity increased significantly just after bonus money was promised. The problem is usually they were just tricking the system. They knew they could do the job in given time but it was better to slack at the beginning waiting for the magic wand of extra money to be used. Then everybody got at full speed to save the project. The only thing which surprises me is where the hell the management was and why nobody did anything about that sick situation?

    I know lots of examples of people working their asses off because project required their extra effort. Usually they got a big bag of money at the end and everyone was happy. Does it mean money motivated them? Well, I think we’re messing the cause with the effect here. They didn’t start discussing with their managers how much they were going to get. They just gave more, because they thought it was a right thing to do (I know I totally oversimplify here, but we won’t discuss everyone’s individual drivers here, will we?) Then the effect usually was they got some extra money, which was of course completely fair.

    And for the end, if money motivates people my question is: why they don’t get more and more motivated as they get more and more money? I gave quite a lot raises and huge piles of extra money in my career and my observation is it makes people happy. Happy, not motivated. They’re engaged as they were. They give a lot, as they did. But somehow they don’t seem to be motivated better.

    Of course sometimes they consider the money they got as an insult and their motivation fall flat in its face but we’re talking about motivating, not de-motivating, here.

    Companies (and villains running them) want to have engaged people but only to exploit them (that’s what villains do after all)

    That’s true for some companies and some villains running them. But if that is your only experience with your employers please accept my humble condolences. There are toxic companies out there. There are normal companies with toxic managers as well which, from employee’s perspective, is no different. The world however isn’t inhabited with villains only. There are superheroes as well. If you’re sick of work among bad guys maybe it’s time to join Rebel Alliance, La Resistance or other good guys of your choice.

    I know it’s easy to generalize basing on your own situation and experience (that’s what I do on the blog virtually all the time), but be sure to check what’s happening out there in other organizations, especially when your experience is limited to one or a couple of teams/companies.

    Because of rapid development of IT industry we face deficit of good, experienced leaders and managers. It’s even truer in countries where the industry is even younger, like in Poland where I live. But still, that’s not a reason to dismiss the existence of healthy companies or decent managers.

    People should earn amount they expect or they get frustrated (which is bad since frustration is such a nasty word)

    Well, yes. Sort of. We come back to the discussion over a healthy level of salary. If I get paid above some expected minimum, which is a very individual thing, I could always use a raise but I don’t get frustrated about money. However if you asked me how much I wanted to earn my answer would be likely something more than I get. That’s how humans work – we always want more than we have.

    And now that you asked me, yes, I do have a pitch to ground why I should earn more. But don’t be stressed, I’m not going anywhere only because my pitch doesn’t convince you. See? I’m not frustrated.

    However I do agree that once we don’t get the amount we expect there’s always a risk that the other company would offer us more and then we’d be really incentivized to make a move. But I guess that’s the risk most of companies tend to accept. After all last time I checked running a business was about earning money and not spending everything just to pay people more.

    Best moment of motivation is when you see the money on your bank account (let’s switch to weekly wages, shall we?)

    OK, I admit, I don’t get this. At all. You mean once you see a bunch of money on your account you’ll be coding like crazy till the night? Would it be a better motivation to earn weekly wages than monthly salaries only because they’re um… more frequent?

    It’s difficult for me to address this argument but I guess we define motivation differently. As industrial bloodsucker I consider motivation as something good not because the word sounds nice but because motivated people tend to produce better results when they work. Call it a better productivity, bigger involvement or whatever.

    I understand people are happy when they see salary on their account but if we can build no connection with their work quality whatsoever let’s not call it motivation, OK? Of course feel free to correct me if I’m missing something here.

    Over time people get more experienced so they should get raises (like levels in RPG games)

    Um… no. Next please!

    Well, actually that’s the tricky one. Once we get more experienced and more knowledgeable it’s a natural thing we tend to want more, thus expected raises. The problem is employment isn’t an RPG game and our contracts aren’t a leveling system.

    Contract and salary represent a result of a kind of compromise. It’s about how much specific employee is worth for specific employer. It means that the same employee would be judged, and paid, differently depending on the hiring company. And yes, it does mean your salary depends on company’s clients, hiring strategy, specific managers you’ve been talking with, shape of the industry, organization’s career paths and a hundred of other factors which are completely independent on you.

    Sometimes getting more experience and/or knowledge doesn’t make you more valuable for the company. So maybe it’s time to learn what makes one a more valuable person for the specific organization instead of waiting for a reward for seniority?

    There are many jobs which can’t be loved which means people do them for money (after all love and money are the only motivators in the world)

    True. There are many jobs which can’t be loved, especially in the corporate world. But that doesn’t mean people do them for money and for money only. If they hated virtually everything about their jobs they would be looking for new ones like crazy. Somehow vast majority of them do not. I assume it’s not that bad then.

    We don’t get frustrated with our jobs in a second or after a single issue. Frustration grows over months, possibly years. Then yes, it is about a single problem or a single situation but it’s just the last straw.

    Our happiness with our jobs is a complex thing. I could count multiple things I’m happy with and multiple of those I’m definitely not happy with. However the overall mark is pretty good so I’m not going anywhere and probably one new ugly thing isn’t changing this attitude.

    I think it works pretty much the same with jobs which are considered as, well, not-so-nice. Corporate world is the one where conditions are usually less humane but then majority of corporations don’t deal with the risk of being extinct in a few months – something which is pretty common among startups. It’s of course only one of examples but the theme is similar in many cases. After all, when the company offers only jobs which are totally hated they’re going out of business soon as CEO won’t deliver all the projects single-handedly.

    Now, I’ve shared my arguments a little less briefly but I’m sure I haven’t convinced everyone (that wasn’t the goal by the way). Let’s get the heated discussion started.

  • Money and Motivation

    A few people have left. Or I should say a few good people have left. Yes, the company has tried to stop them but well, when people decide to go it’s usually way too late.

    The next station is realizing that people are gone. Well, they will still come to the office for a couple of weeks but they are gone. Gone. If you wanted to change their minds you should have worked with them a few months earlier.

    And then there comes the idea that you should at least take care about those who are still here. When people leave, their colleagues start thinking about leaving too. That’s how it works.

    So we come to the point where most of managers use tools they have to keep retention on reasonable level. Quite often they use the only tool they think they have, which is money. “That should keep them motivated for some time. And they won’t leave either.”

    Yes, except it isn’t true.

    As I think more about money and motivation I’m closer and closer to Dan Pink’s approach: pay enough to get the money off the table and then focus on things which really motivate people. By the way if you haven’t seen Dan Pink’s TED talk about the subject you really should do it now.

    OK, so what kind of effects you should see when you throw more money at people? For some of them it would take the money problem off the table. Will it keep them in the company in the long run? I don’t know. You are either able to build creative, motivating work environment or you aren’t and raise won’t change anything in the long run.

    For others money wasn’t the issue in the first place. They will happily accept raise, that’s for sure, but is it going to change their approach? Not so much.

    Now you can point a number of examples when someone you know has changed jobs purely for money. I think they fall into the first group. The only difference is in their cases money was a major problem and not a minor one. Bigger salary doesn’t make them motivated – it just gets the problem off the table. It isn’t guarantee that they won’t eventually leave. If your organization suck they will. You can buy a few months but the outcome is going to be the same – they will be gone soon.

    In short: if you have a big bag of money you can make people stop complaining about their salaries, but you won’t make highly motivated top performers out of them.

    I know people who are leaving with no change in remuneration whatsoever. Heck, if you look for people who changed job and got lower salary in the new place I’m one of examples. And yes, I’d do it again. I’ve never left any organization (or project) for money, even though sometimes it was an issue.

    If all you have is a hammer everything looks like a nail. If the only tool you have is money, every problem seems to be solvable with cash.

    But then you see teams which don’t get any bonus money whatsoever and they’re motivated and those which spend days complaining about lack of bonus money. All in the same organization. They are even paid basically the same. I see two possible explanations: one supports argument above and the other includes words “black magic.”

    If people go, you won’t change that if the only thing you can think of is throwing more money at them. Unless you’re paying peanuts, that is.