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Gini Dietrich

Paying Employees for Innovative Ideas: Why It Doesn’t Work

By: Gini Dietrich | August 30, 2010 | 
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Last week I had the pleasure of meeting Christopher Burgess in person. He is a senior security advisor at Cisco and we had a delightful debate about social media, networking online, and location-based technologies. A blog post with his advice on keeping yourself safe online is forthcoming, but today I want to talk about the discussion we had around paying employees for innovative ideas.

Though I don’t have all of the details, the gist of this program is that Cisco pays $500 to every employee who comes up with an idea, a few thousand for those whose ideas are good, and a few thousand more if a patent is sought and the company uses that idea. Cool idea, right? So, why then, other than the person who sends in several hundred ideas a week (known as internal spam), is no one taking part of this program?

While I rode my bike the next morning, I was thinking about that and about Daniel Pink’s philosophy in “Drive.” If you’ve not read the book, I highly recommend it, but if you want to get the Cliff’s Notes version, watch this 12 minute video clip, “The surprising truth about what motivates us” (though, I warn you, it may make you car sick – it did me).

Pink shows study after study about the things that do motivate us, as human beings, and money isn’t one of them. So I have this discussion with Christopher about the program at Cisco, I’ve read “Drive,” and, that very same week, it was a topic of conversation in my Vistage meeting. A lot of my fellow Vistage members believe people are, in fact, motivated by money and that it doesn’t matter what rewards you give employees, they won’t appreciate them unless they’re in the form of cash.

I vehemently disagree. Don’t get me wrong. I’m motivated by money. I love being able to buy wine and shoes. It’s pretty nice to be able to pay my bills without living paycheck to paycheck. But I didn’t take a paycheck for nearly a year during the recession (and I haven’t bought wine or shoes in two years), so it wasn’t money that was getting me up every morning to go to work and to grow a business through an economic meltdown. My employees didn’t receive raises or bonuses for more than a year so it wasn’t money getting them up to go to work every morning.

Put in a different light, if someone were to pay you double your salary, you’d likely take the job, right? Most of us would. But then let’s say you get to your job the first day and they walk you into an empty warehouse. They put a chair in the middle of the warehouse, take away your technology, and tell you it’s your job to sit there and do nothing. How long would you make it? I’m willing to bet not an entire week…despite the amount of money you are making.

I’m not so naive to think that monetary incentives don’t work, but I do think if you want your team to be innovative and create good ideas consistently, the rewards need to be in the form of something they wouldn’t necessarily buy themselves, but would love to have (i.e. gift cards to expensive restaurants or stores, a $300 flat iron, or even a $50 Starbucks card). I wonder what would happen if Cisco changed their program from monetary rewards to incentives that were personalized and meant something to the employee providing the idea?

What do you think?

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, a Chicago-based integrated marketing communications firm. She is the lead blogger here at Spin Sucks and is the founder of Spin Sucks Pro. She is the co-author of Marketing in the Round and co-host of Inside PR. Her second book, Spin Sucks, is available now.

24 comments
Christopher Burgess
Christopher Burgess

Motivation and recognition - two separate but similar stimuli. I would say that motivating creativity is to open the white-board to blue sky innovation. The recognition for taking the blue sky and creating something concrete can take the form of monetary, peer recognition, senior recognition and industry recognition. In the end, in my personal opinion, I think we all want to be recognized for our contributions, know we are moving peddling and collectively riding in the same direction toward success and bring meaning to the equation - regardless of our chosen path.

Cheers,
Christopher
@BurgessCT

Les McKeown
Les McKeown

You and Dan Pink are both right - of course there *are* people who are more or less only motivated by money, and there are those - usually the high performers - who are motivated by something higher. Think of the difference between a journeyman golfer or tennis player just on the tour for the money and those who really make it - they're the ones with fierce inner drive.

Our choice is which ones we hire. Once the hiring is done, the motivation issue is decided. There's no point hiring journeymen and expecting them to be self motivated, just as there's no point hiring high performers and expecting them to stick around just for money.

For a powerful look at the difference between the two, just take a gander at this slideshow from Netflix on how they hire and motivate. I guarantee it'll make you think till it hurts (at bottom left):

http://www.netflix.com/Jobs

Arik Hanson
Arik Hanson

Excellent topic and one I'm passionate about myself. I have read Drive and love Pink's main theories (as you've stated, that money is not most folks' primary motivation).

Personally, I can tell you that money has rarely been my primary motivator in my career moves. And, in working for a number of different employers over the years, I can tell you that I have seen the same thing happening with my colleagues, too.

I think most times, people just want new and different opportunities at work. Sure, they want to be compensated for what they do. But mostly, they just want to be challenged. They want their work to be valued by those they work for (management, are you listening?). And, they want opportunities to express themselves creatively.

And, in all my years of working with people and seeing folks come and go from employers, again I will say, rarely has money been the motivating factor in those moves.

@arikhanson

Kate Groom
Kate Groom

Hi Gini,
I agree with Brad that money is a hygiene factor; people should be paid a fair wage for what they do and we should run our businesses so this is possible. To reward with cash when that isn't really affordable doesn't help anyone.

It's the job of the leader to inspire and motivate people to achieve the goals of the business (which include the culture, IMO) so absolutely it is about finding what motivates people and what fits in with what the company can afford.

It's also the job of the leader to deal with the challenge that comes from us saying that money is important but that in the end we know that people will go the extra mile because you show them they are respected, valued, appreciated and their contribution matters.

Too often I hear people complain that their people aren't motivated, yet they haven't taken time to understand them and get to know them. They fret about how much money to pay and don't bother with birthday cards or thank you's or acknowledgement. Of course, this requires a bit of effort and calls us to account on whether people matter to us.

This is not easy. We live in a world that tends to make us think money and things are the measure. At some point, many of us discover that more money and more things don't make us happier. As leaders, we can help people see this through our own actions.

In my own leadership journey, I discovered that Thank You cards and small gifts really were appreciated and helped our team pull together. But in the end, as leaders we are responsible for our own choices about how we lead. There are probably no right answers, it comes down to how we choose to lead. But if what we do doesn't produce the result we want, it's right that we take a look at how we are responsible for the outcomes and what we can do to change them.

Thanks for another cracker of a post,
Kate

Paul Hebert
Paul Hebert

Actually Pink said incentives work too well and poorly designed will create unintended consequences and can reduce success in some talks. I agree that if salary and benefits meet a minimum level additional cash incentives are not as effective as purpose, sense of progress and a certain level of autonomy.

As others have commented non-cash incentives don't have the same effect as cash does and shouldn't be lumped together when discussing awards. Pink specifically addressed cash incentives not other ways of providing awards and recognition.

The other thing to consider is we often say we want more money but studies show we are happier with, and respond better to experiences and non-cash rewards. Wr are very irrational at times.

Gini Dietrich
Gini Dietrich

Rachael - That's exactly what we did last year when we couldn't give raises or bonuses. We still promoted people, but gave them extra time off in place of a raise. People really appreciated it and it helped with the culture, too.

Shenetta - See YOU soon!

Lauren - I think we actually agree here. A person needs to be making a salary they think is fair for the job they're doing or no incentive works. If you're making a salary commiserate with your responsibilities and you're being honest with yourself, you're likely going to be more motivated by something you care more about than a cash bump that you'll just spend and not remember in a week...as to Barry's point.

Skyler, Totally agree with you!

Erik, I think the difference between your thinking now and in the past is now you work for yourself. So you understand the value of new ideas and what motivates you, even when you're not making money. I agree that recognition typically goes further than money.

Brad, I didn't get the fairness thing you describe from the book. But I agree that, like you, I'll always share. I'll always take care of my staff, no matter how big or small we may be...and that means paying them above the average for their pay grade. It's how we compete with the big agencies, but it's also part of our culture to be treated fairly.

Jan, LOVE the idea of a trip. Now how do I get that?! :)

Brandon, you nailed it on the head! You're exactly right that the whole premise (like I said above to Lauren) is that people are being paid fairly. I remember when I took the job at Rhea & Kaiser and I negotiated my salary. I really felt like they were taking care of me and I was less motivated by the annual raise and bonus and more motivated by the extra incentives around extra time off or coming in after 8:30 a.m. because I liked to work late and preferred to go to the gym in the morning.
I don't know how that helps you with your physicians, but there has to be a way!

Graytuna, one of the things we've talked about internally is letting people work one day a quarter on anything they want. No client work. No Arment Dietrich or Spin Sucks work. Just what they want to work on. That's where the best ideas come into play and people get the autonomy to do what THEY think is best.

Paige, Foiled Cupcakes. HAHHAA!! Now I know how to bribe you!

Jelena, you actually don't agree with me. We're in total agreement. If you work for me and I feel like you've gone way above and beyond the call of duty, I'm going to give you a Home Depot gift card or a Organized Living gift card or a savings bond because I know that saving for your house or making it pretty is important to you. But it's my job to find those things that are important to you to incentivize you. I also think the idea you have around how Cisco can build the idea is brilliant...and exactly what Dan Pink discusses in Drive (and what Graytuna says above). It's allowing people the ability to work in a way that motivates them to do their best work.

Grayson and Skyler, See what Barry says in his comment. I think we all agree that the idea here is that everyone is paid what they think is fair. They're getting annual raises and they're getting bonuses for exceeding their goals and if the company exceeds its goals. What we're talking about here are the extras. The time that you really take a leadership position without being asked. Or the time that help out a colleague, unbeknowst (at the time) to your bosses. Money is less a motivator in those situations.

GertLambers
GertLambers

I do agree that money as such is not a motivator to walk the extra mile!

On the other hand I do think that not all jobs are satisfactory on it's own... And wouldn't get done without a monetary incentive.

I think a minimum comfort level is necessary to get to a level where an additional monetary incentive is not motivating anymore to do something extra

Barry Silver
Barry Silver

I remember receiving an unexpected bonus from an employer (Cash, I can't remember the $$). A week later I was so frustrated that I could scream and realized that cash has a memory-life of about a week. I remember another unexpected bonus from an employer of an overnight stay at the Park Hyatt with breakfast the next morning. I remember when my wife and I took the overnight (9 mos. later) and where we went and what we did. So cash is nice but does not provide memories.

Grayson
Grayson

I think that personalised gift type items are nice, but money is better. But as indicated, money alone isn't the incentive.

I think that it is a combination of money and public acknowledgment and appreciation. Perhaps a small plaque with something less formal written on it. Wording that is addressed to the recipient, rather than to whoever may be reading it. So instead of, ""This is in recognition of", it should be "You" did a great job, or had a great idea, and "I" and the rest of the management team really appreciate it. And of course, have their name on it.

Or if they are the one with the great idea, they lead certain meetings for a set amount of time, or get to lead the project or hold a vital, and positioned place in the project. This, in addition to the money bonus.

Although, these particular examples may not be right for everyone, I do think that public acknowledgment in a tangible form, along with money, is a great motivator.

Jelena
Jelena

Actually, I have to disagree with you on this one, Gini. I see the point you're making, but I think the reason just paying for ideas doesn't work has less to do with money as a motivator than with what happens after the idea is purchased. What visionary with great ideas wants to give one up for someone else to judge, value in cash, and then take away and manage if it's judged to be good?

A better motivator in Cisco's case would be that an employee with a great idea would receive a small bonus himself or herself, but would also be permitted to use a certain amount of time and resources to develop that idea. But that again depends on Cisco being able to accurately evaluate these ideas, and as we all know, often the best ideas that come out of larger companies are the ones someone had to fight for or even steal time and resources for, knowing that the final product would (hopefully) be good enough to avoid getting them fired when their methods were necessarily revealed.

"Idea people" don't want to push ideas out into the troposphere to be judged and either thrown on a trash pile or taken away from them. You lose the idea no matter what when you offer it up for one of those cash bonus programs. You can't say "I decline your offer of $500; I think this idea is better than that, so I'm taking it back and I'll work on it in my own time."

If companies want employees with ideas, they need to create a culture in which a reasonable amount of resources are devoted to pursuing ideas, with the understanding that in most circumstances the result won't be great. Google does this well, of course, with their policy of directing employees to spend a certain amount of time working on anything they want to work on that pertains to their job. People in totally different roles wind up developing interesting new Google products.

As far as gift cards or gifts as incentives, I'm skeptical that even the best boss could know me well enough to know exactly what I'd want but wouldn't buy myself. I think I'm more motivated by cash, because I'm a pretty driven and goal-oriented person, and a cash bonus would make me feel that my employer felt strongly about helping me achieve the things I've laid out for myself. For example, $500 would do a lot more to make me happy by getting deposited into my savings, earmarked for future home renovations after I buy a place, than by getting spent on a gift card.

Paige Worthy
Paige Worthy

I definitely agree with you on this one, Gini. Coming from a job where I wasn't rewarded AT ALL for coming up with great new creative ideas — maybe some grocery-store cookies at a meeting every once in a while — I can safely say that there would have been much more incentive for me to dream up great ideas that we could really follow through with if there had been some incentive above and beyond my salary to reach for.
(Maybe some Foiled Cupcakes…)

Karl
Karl

Good Points. You probably saw this video on motivation. It is interesting what type of tasks people are motivated by money and tasks that don't.

Interesting if you haven't seen it yet

http://www.youtube.com/watch?v=u6XAPnuFjJc

Graytuna
Graytuna

What a great example with the warehouse! - What a waste of time indeed to be stuck in that situation.

I believe that Autonomy can be a powerful tool to support creativity. For example 24 hours of pure creativity time. Google is a great example of an innovative company with results as Google Wave and Gmail.

Of course it depends on - Money can perhaps work in another form like you mentioned... gift-cards.

Thanks for sharing interesting video and thoughts guys :)

Brandon Betancourt
Brandon Betancourt

I’ve been thinking a lot about this topic as I try to create compensation packages for doctors that are in private practice. I’m a private practice administrator and physician compensation is a topic that comes up often.

Although I agree with Pink and I absolutely agree with your empty warehouse analogy, I also believe that people are more often than not dishonest about what motivates them.

Research may suggest people want autonomy, mastery and purpose, but when it comes down to it, they want the money above all else.

If I were to ask an employee, would you rather work on something meaningful that gives you a sense of purpose or would you prefer a 20K raise, I would argue that most would want the raise.

But as Pink himself says, ideally you want to pay someone “enough” where money isn’t an issue in their lives. And there lies the difficult balance.

Great post!

@PediatricInc

Jan Beery
Jan Beery

Gini,
I was a Director of Sales in the medical industry and also worked in media. I found that the best incentives weren't straight cash. If it were cash, it would be coupled with a contest award. We used trips, gift cards, spending money for the trip and made a BIG deal with recognition for the winning at a meeting.
Very successful!

Brad Farris
Brad Farris

Money is a hygiene factor. Meaning that if it's too low it's very demotivating, but if it's too high it produces very little additional motivation.

That said I do think there is a place where Daniel Pink is a bit off, and that is in the area of fairness. When I have a great idea and my company makes millions off of it if they don't share even a little, that's demotivating. But if they share some, even a token amount that's makes me feel better. That's where programs like Cisco's make sense, they are "sharing the wealth" not rewarding good ideas. Or at least that's the way I would position it.

Good discussion.

Brad

Erik Hare
Erik Hare

For all the intellectual property I generated during my days as a research engineer, I was never paid a thing for "innovation". It was my job.

I believe that innovation should be everyone's job. Now that I'm not part of some large corporate structure I have to keep my eyes open and look for opportunities wherever I can. I do not understand why a corporation should function differently.

What I believe is needed is a system that recognizes innovation by giving those who consistently demonstrate the skills the freedom to pursue what they enjoy. THAT is what generally motivates people - even more than money.

Skyler
Skyler

Cash is king, but equity is better ;) In all honesty though, when an employee comes up with a great idea, sometimes just giving them the credit and praise for the success is enough. I think more than anything, having employees who feel appreciated and indispensable parts of the team, go a really long way, and most importantly, keep contributing above and beyond the call of duty.

Lauren Golanty
Lauren Golanty

I agree with the post, but only if the condition that Shenetta mentioned of having "a job you love and a career that you are passionate about" is met. Given the climate, this isn't the case for many people. I don't think it hurts to have the option of giving people incentive for their ideas, which provides both reward and an outlet for those stuck in less-than-inspiring positions. Or does it? What is the downside?

Shenetta Johnson
Shenetta Johnson

I agree. I like the "empty warehouse" visual. It really puts things into perspective. I probably wouldn't last an hour! Finding a job you love and a career that you are passionate about is the most important thing and with that the money will come along.

Thanks for another great post! I will see you soon :-)

Shenetta

Rachael
Rachael

I have to agree that money isn't everything. I have found personally and also in other fellow employees that time off is valued more than the money. Because at the end of the day after taxes that check isn't much, but the extra day off or so gives you time to spend with those you love or just relax.

I've added this book to my list, can't wait to read it!

Have a great day Gini!

Rachael
@kuuiposeda

Jelena
Jelena

Okay, I give, Gini, we don't disagree... much. You do "get" me. On the other hand, I'm still a little skeptical that as a larger company's company-wide policy, using gifts and gift cards as incentives would go over well. There's always going to be a clueless manager somewhere in the organization who hears "Your employee had a great idea, reward her with something she'd like," and picks something that makes her feel put down or condescended to.

In animal behavior (my original career goal!) a common saying is, "It doesn't matter if you feel you reinforced the behavior, it matters if the animal feels reinforced for the behavior." That applies to the human animal, too. A skilled manager (like you, Gini) reinforces the behavior they intend to reinforce in a way that makes the employee feel reinforced.

Really, any discussion of incentives in my opinion underscores the importance of weeding out unskilled management in any company, large or small, and creating ongoing training initiatives that don't detract from workflow for even the best managers. One bad experience with a more diversified incentives program (cash is easier, since it spends the same for everyone!) could sour it for the whole company, especially if some idiot goes off and gives a gift that emphasizes someone's gender or race over their individual character.

Grayson
Grayson

Gini: I was commenting directly upon your post.

The question was of motivation and whether money alone was or was not a true motivator to exceed normal expectations. I am not referring to typical promotions or raises.

Skyler
Skyler

I couldn't agree more Grayson! Having ownership of the idea and managing or contributing to it's incubation is clutch and often times much more rewarding than any other type of compensation. It's a terrible feeling coming up with a unique idea and then having to pass it off to never hear from again.

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  1. […] Gini Dietrich’s recent post about why paying employees for innovative ideas doesn’t work, I told her about my recent attempt to motivate my employees without […]

  2. […] few months ago, after I read Dan Pink’s “Drive,” I wrote a blog post about paying people for their ideas and why it doesn’t work. I got A LOT of push-back in the […]