As a manager, when you are engaged in helping team members set performance or professional development goals there are some important considerations you should have regard to.
For example, before settling on a goal or objective, you should ask yourself questions such as:
These are all good questions, but there is one question that you need to ask yourself that deserves prior consideration:
How motivated are your staff going to be to do what it takes to pursue their goals until they are achieved?
In business we usually have operational or financial targets that are central to the economic or strategic performance of the organisation (complete certain projects, finalise so many transactions, deliver a complex change program). It therefore seems intuitive that we should use these targets as the focus, or at least the starting point in our performance goal setting.
The drivers in place to encourage achievement of these kinds of goals often involve financial rewards, such as bonuses and fees earned, or recognition, such as appraisals, recommendations and the like. There may also be negative drivers – avoidance of criticism or performance management issues, even the need to make sure that a job is not lost.
These operational objectives are therefore usually underpinned by a very traditional carrot and stick, extrinsic reward system.
This kind of system sets up motivators for performance that are external to the task and to the person undertaking the task. If you generate so much revenue then your bonus will be above a certain level. If you do not meet the deadline for this transaction then your future prospects in the firm are diminished.
There is, however, one very significant problem with extrinsic reward systems and that is that, in most cases, extrinsic rewards are not actually very motivating at all.
Extrinsic motivation has been shown to be substantially less effective as a driver of performance than its counterpart – intrinsic motivation – which is the kind of motivation we experience when the challenge, joy or satisfaction we feel in accomplishing a task offers its own reward.
What’s more, extrinsic rewards do not merely fail to motivate. They bring about a negative effect – they actively de-motivate.
Take a look at the conclusion that leading motivation scholar, Edward L Deci and his colleagues came to after an exhaustive review of 128 studies which examined the effects of extrinsic rewards on intrinsic motivation:
“… tangible rewards tend to have a substantially negative effect on intrinsic motivation … . Even when tangible rewards are offered as indicators of good performance, they typically decrease intrinsic motivation for interesting activities. Although rewards can control people’s behavior — indeed, that is presumably why they are so widely advocated—the primary negative effect of rewards is that they tend to forestall self-regulation.
In other words, reward contingencies undermine people’s taking responsibility for motivating or regulating themselves. When institutions — families, schools, businesses, and athletic teams, for example — focus on the short term and opt for controlling people’s behavior, they may be having a substantially negative long-term effect.” (Deci et al 1999).
This was recently borne out, in relation to performance related pay, when management scientists at the London School of Economics analysed 51 studies relating to financial incentives in the field of employment.
They found ‘overwhelming evidence’ that performance related pay can result in a negative impact on overall performance, in particular by negatively affecting an employee’s natural inclination to complete a task, as well as their ability derive pleasure from doing so.
They also concluded that not only do financial incentives reduce intrinsic motivation they may also, worryingly, “diminish ethical or other reasons for complying with workplace social norms such as fairness”.
So what is the alternative?
What kinds of motivations working are likely to foster positive performance and higher levels of workplace satisfaction?
The answer, according to Deci and his colleague Richard Ryan, lies in their self-determination theory (SDT) – a theory that is increasingly supported by the evidence emerging from the work of numerous researchers in the field (see the review in Deci and Ryan (2008)).
SDT holds that as humans we have innate psychological needs – competence, autonomy and relatedness. When these needs are fulfilled we are productive, motivated, satisfied and happy. If these needs are not met, our motivation, happiness and productivity diminish.
The kind of motivation generated by fulfilment of these needs is intrinsic motivation – motivation that arises due to an internally held desire to complete the task.
So let’s look at each of these needs more closely.
Autonomy is the need to be engaged in activities that we value and that are undertaken with a freedom of choice.
Competence is the need to use our skills and abilities in support of achieving those valued outcomes.
Relatedness is the need to feel close and connected to other people.
You may be able to recall for yourself times when these three elements have come together in what you were doing, whether within the workplace or not. And if you can, you can probably testify to the empowering effect of having these needs met.
You may also have experienced the numbing effect that arises when the opposite happens – when, for example, we are denied control over the work we do or how it should be done. In those cases, we quickly become disengaged and lose motivation.
Therefore, for managers and leaders, if we harness these aspects of self-determination theory, we can create intrinsic employee motivation and the conditions for staff growth and development.
We can do this by through approaches that directly support autonomy, relatedness and competence.
For example, we can adopt a person-centred coaching style (relatedness), we can encourage the use of strengths (competence) and we can promote autonomy by encouraging values based ownership and responsibility in relation to the work that team members are doing.
According to Deci and Ryan, the leader can maintain motivation and engagement by:
So, next time you are working with your team to set their performance and development goals, think carefully about how you can use some of these methods to help generate the motivation your team members will need to see them through.
Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 125(6), 627.
Deci, E. L., and Ryan, R. M. (2008) Facilitating optimal motivation and psychological well being across life’s domains, Canadian Psychology 49, no 1 (Feb 2008): 14.
LSE: When performance-related pay backfires, Available here
I'm Martin Cole. I am a UK qualified lawyer, a leader within the financial services regulatory and compliance sector and an organisational and executive coach. I have an Master of Science (M.Sc). in coaching psychology and am certified as a coach by the Institute of Executive Coaching and Leadership. I also have a Bachelor of Laws (LLB (Hons.)) and was admitted as a barrister by the Inner Temple (now non-practising). I have lived and worked in London and Sydney and now live near Edinburgh in Scotland with my wife and two daughters. I support Crystal Palace FC, have wide ranging musical tastes (especially Jazz, Blues and Soul) and oppose mediocrity, selfishness and organisations that fail to value their people.
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