Carrot, stick or flat-rate trick?

Hello Bloggers

I was idling through the business pages this weekend (I know…my actions qualify me for a Millet’s overcoat!) and stumbled across a fascinating review of a new management book published by Canongate books – the title being Drive: The Surprising Truth about What Motivates Us. The author Daniel H Pink, business leader, was writing about his experience at work. This feature made me leap from my chair with a yelp and Mrs S shot me an agonised glance that said ‘Oh Lord, he’s off again!’

Daniel Pink was describing the complex problem of pay and rewards for two private sector ICT companies (from the US and UK) and, more specifically, how their sales team were motivated to increase sales. Equally complex systems had evolved in both companies where commissions were characteristic as the main means of increasing motivation to improve sales -in sales a fairly traditional mechanism to stimulate employee productivity.

The two companies (Red Gate Software from Cambridge in the UK and System Source from Baltimore in the US) had developed increasingly sophisticated means to overcome human behaviours that manipulated ‘the system’ in order to maximise commission returns. Eventually, and entirely independently of each other, they thought the unthinkable and decided to scrap the commission-based carrot and stick reward system – preferring a flat-rate, salaried approach.

The result? Improved teamwork, improved employee engagement and improved sales.

In the public sector as we contemplate total rewards and contribution pay, Daniel Pink’s work suggests to me that we need to construct and implement our reward strategies with great care. After all…we’re strapped for cash as it is.

Dean

By | 2017-07-30T12:23:35+00:00 June 1st, 2010|Categories: Dean Shoesmith|2 Comments

2 Comments

  1. Lee Burman 1st June 2010 at 4:11 pm

    Hi Dean,

    Us recruiters are often perceived to be far more interested in the pounds rather than the person. Certainly in my earlier career I have witnessed these behaviours and I entirely agree that in the wrong hands it breeds negative motivations.

    I do however believe that the culture and environment has a lot to answer for.

    As an example, my own experiences of working in a commission structure with my current employer is entirely different to that of previous employers. Whilst on the face of it we deliver similar services, the environment in which we deliver couldn’t be more different. For example there is no pressure to hit a certain number of calls, client meetings or sales targets every month. Managers are ABSOLUTELY NOT focused on quantity and statistics. Without this pressure there is little temptation for consultants to take a short-cut based on what’s good for us, rather than what our clients need.

    As an aside whilst I enjoy being rewarded via a commission based structure I would be very happy to work on a salaried basis, perhaps even with a long-term year end bonus linked to customer satisfaction rather than sales.

  2. Dean Shoesmith 6th June 2010 at 11:10 am

    Dear Lee,

    Many thanks for your interesting comments on my carrot and stick blog. Whatever mechanisms are used for pay and rewards it’s clear to me that linking human behaviours andremuneration is complex and often tricky to get right.

    Best wishes

    Dean

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