Book Review- Drive by Daniel Pink

I have been reading Drive by Daniel Pink. It takes ideas like, "Mastery" from Senge to the next level. The core idea is that most scientific analysis has found that you can offer bonus, commission, and incentive pay; but the result is often a temporary increase in productivity or quality, and an overall decrease in both over the long-term. When you offer money, people stop wanting to curiously explore and start wanting to get the money and the measurable result is worse outcomes in any situation that requires discovery, curiosity or creativity.

Pay needs to be at a level that sustains life and compensates for certain drawbacks of the job (travel, hours, etc.) but after that, you don't get better performance for more money, you usually get worse in the long term. Variable pay only works reliably when the work requires no creativity, is routine, and boring such that nobody will decide they like it enough to do it for free. It was designed in the era of assembly line hand manufacturing and has been carried forward, but collapses under sustained scrutiny. Some aspects of work will always fit that definition, like answering emails, showing up exactly at 8am, or working from an office when home is just as good.

I worked for a company that had a lot of products, more than they could seem to sell. They put commission bonuses on the biggest money makers and so the lesser money makers never sold at their predicted levels. They moved the incentives around and behavior changed, but the commission was always lower on less profitable products and so they sold less than predicted. They talked a great line about selling a solution, a complete system with all the parts, but in the end, only the high margin, high compensation tied products would sell at the projected rates. Drive argues that flat pay, maybe a bonus for company wide performance, would have been better in the long run than the commission structure because employees would have wanted to sell all the parts the same, to solve the customers whole system issues with a solution, but the pay structure destroyed their self-motivation to do that.

Once you see it, you start to see it everywhere. Poorly thought out incentives against the recommendation of research. Return to office would be a great moment for pay for performance activity. This aspect of work doesn't require self-motivation, but I see corporations spending their money to try to make the office nicer, ignoring the parts that work against it, like traffic. In contrast, paying for patents or inventions is the opposite of what you want to do. It produces more patents in the short term, but far less innovation in the long term. The book has lots of examples of better benchmark program designs that use innate human curiosity as the incentive and pay as the safety net, to produce far greater innovation.