Incentives and the rediscovery of Herzberg

Well I've been saying it for long enough. Monetary Incentives simply don't work!
Now Nottingham University ( see http://www.nottingham.ac.uk/news/pressreleases/2011/february/thetruthaboutbonuses.aspx ) reckon that a mixture of punitive fines plus incentives works better than incentives alone. Well maybe in the laboratory but in the real world comparisons are made and, most important of all, actual job content counts for far much than what Fredrick Herzberg (see http://www.trainanddevelop.co.uk/view_article.php?ArticleID=78) dubbed Hygene factors. That is the things that will demotivate us if they're not OK. That is in turn vastly different to the Motivators - relationships, job content, control and flexibility that really turn us on and get us firing on all cylinders. That's what we have to hold in mind when shaping jobs, organisations and pay/incentive packages. Pity the bangsters never understood.

Meanwhile we've a government obsessed with controlling the uncontrollable and offering incentives to companies to come and run services that, without the spurious controls and measures, could be run so much more cost effectively than they are now or will be under a for profit regime. Today we learned that 14% of the NHS budget is spent simply on the disaggregation of purchaser and provider. Put out the £80bn to GPs and this figure will rise dramatically leaving even less to spend on patients.

What's that to do with fundraising you ask? Not a lot save it will put even more pressure on charities to pick up the non standard pieces and fund them from voluntary income. Time to start taking responsibility for the whole funding mix not just fundraising. That's pure Herzberg!

The Big Debate

Did I say it would be cracker? Well it was. Mick Aldridge, just voted the most influential person in fundraising by Fundraising Magazine, and I went head to head over the issue of paying fundraisers by commission.

Where we agreed was that there are always exceptions and no rule ought to be set in stone and never questioned. Mick made the point that, increasingly street and house to house collectors are remunerated partly by commission though, I thought, ducked the issue of the vital difference between incentivizing acheivement and paying only by immediate results. That of course tends to be the biggest objection that such payments can lead to short termist, expedient fundraising which will, over time always lose out to a well planned giver centric approach.

The crucial point however made by yours truely is that commission payment simply doesn't work! Read Frederick Herzberg and you'll see, or remember that money isn't a motivator. If it's not enough it's a demotivator but that is utterly different. That's why the banks continue to pay obscene bonuses because everyone else does.

So let's not go down that road. Motivation, job enrichment (more Herzberg) incentives for producing outcomes (not outputs) has got to be the way to go.

Or are you still (unlike everyone at the AFC annual forum) unconvinced?

"There may be trouble ahead........."

A very suitable line for all the bankers who've survived the recession because they were bailed out by the Government. What's more they seem to be echoing the refrain and,as the Irving Berlin song goes on to say, "Lets face the music and dance", they seem to be doing exactly that. In the face of massive criticism some of the banks are awarding huge utterly inappropriate bonuses forgetting entirely that the reason they've returned to profit has little to do with performance and everything to do with the shareholder funds that have been put at risk.

Profit always was about generating a return on investment - for - wait for it, the investors! Performance related pay has always been a very iffy incentive. ANYBODY who has read Herzberg knows that money is not a motivator at all! (read it, lack of money is a demotivator). Sales staff work best of all when facing realistic targets and with incentives that encourage the long term view. Sometimes up to 10 or 15% of income may be tied to performance when it can be directly attributable. Any more is in fact counter productive.

The same goes for fundraising investment. It's a no to performance related pay but a big yes to appropriate incentives to reward genuine effort, creativity, effectiveness and carefully assessed risk taking.

You heard it here first. The world is, I'm convinced, about to rediscover Frederick Herzberg (http://en.wikipedia.org/wiki/Motivator-Hygiene_theory for a quick and dirty explanation).