You’d be hard pressed to find a modern company that believes in the ‘stick’ as the best way to motivate people. But what if I told you that the ‘carrot’ might not be the answer either?
It is easy to think if you pay people more, the happier they are. Of course, remuneration matters; people will leave if they feel that they are paid too far out of market. But as soon as you are paying people enough, remuneration stops being a substantial driver of engagement.
Ultimately, people need feedback, opportunity, and visible career development. We’ve all seen people go to another job that has more of these things (despite the same or less pay).
Whilst remuneration itself is not a driver of engagement, there is a clear link between remuneration and culture. The link is, that when designing a remuneration strategy, you must structure it in a way that mirrors and reinforces the culture you want to cultivate.
Does your organization hunt as a pack, or eat what you kill?
Harvard Business School professor David Maister is a leading authority on what makes a successful professional service firm. He believes the most important question from a cultural perspective is to agree on the answer to: “Do we hunt as a pack or do we eat what we kill?”
It’s not that one is right and one is wrong, but you must be clear on which culture is right for your business as it sets expectations of how people should act with each other.
Eat what you kill
Choosing “eat what you kill” creates a particular type of mentality. It is appropriate for cultures that foster competition amongst sales people or positions that require people to make huge volumes of sales or appointment-setting calls. Remuneration is based largely on commissions. High achievers will go above and beyond to bag the trophy (get the sale), and they get to keep the spoils to themselves.
It is difficult to get high-level cooperation in an “eat what you kill” culture, because you’re actively creating an environment that penalizes you for doing so.
Hunt as a pack
There is a greater chance for cooperation in a “hunt as a pack” culture, but it is not without its challenges. Where remuneration is by way of salary or collective bonuses, some people will feel like they're doing more than their share of the lifting, and feel resentful of those they perceive to be leaners.
It can be difficult for people coming from a traditional commission-based sales role to adjust to the team-based structure, and managers need to have a strong pulse on the team, because you can’t determine who are the high achievers by simply looking at a number.
When it’s done right, however, a pack can bring in much greater prey than individuals working alone.
Remuneration at Culture Amp
Culture Amp is firmly within the “hunt as a pack” camp. We are solving complex, interdependent problems that rely on multidisciplinary collaboration.
We were very intentional in setting it up that way. When we were developing the model, I questioned other CEOs about why they opted for commission rather than a good salary for their sales teams. Answers invariably revolved around sales people being ambitious and achievement-orientated; they need the thrill of the hunt. Instinctively, that made sense, but then, most of my good engineers are like that too, but they don't need commissions to get out of bed in the morning.
To me, the notion that the only way to get salespeople to perform is to wave the carrot of a commission in front of their nose dehumanizes them. Human beings are not coin-operated. What we have found is our good people are intrinsically motivated, to the point where no matter what bar you put in front of them they will raise it anyway.
Your remuneration model creates and reinforces your culture
The way you choose to compensate people will shape your culture. It's bewildering to see companies that say their core value is collaboration and yet they pay bonuses based on individual performance. If collaboration is your core value, then it is counter-intuitive to promote individual performance over group performance.
Finally, to borrow a quote from Harry S Truman, "It’s amazing how much can be accomplished when nobody cares who gets the credit.”