Tuesday, November 27, 2007

Intrinsic vs extrinsic motivators

I thought I would take another run at this topic by telling a story. :)

Way back in 1996 I had the good fortune of attending an Olympic gold medal soccer game between China and the U.S. It was a wonderful experience, and one that I will always remember. As it happened, I was sitting directly behind Kristine Lilly's family. Her father right before the start of the game announces to everyone, "I told her I would pay her a quarter for every goal she scored." We all had a good laugh.

Do you think Kristine would have scored any more goals if she was actually being paid a quarter? Do you think Alex Rodrigues will hit any more home runs next year because he'll receive monetary bonuses for taking it out of the yard?

A-Rod would receive $6 million dollar bonuses for reaching Willie Mays, Babe Ruth, Hank Aaron and Barry Bond’s home run levels making a total of $30 million dollars of his new Yankees contract based on home-run incentives.

2 comments:

Mitch Owen said...

Herzberg found that they do not work together.. they work independently, but in different ways.. But both play a role... Here is the theory as quoted out of wikipedia...

Two Factor Theory distinguishes between:

* Motivators; (e.g. challenging work, recognition, responsibility) which give positive satisfaction, arising from intrinsic conditions of the job itself, such as recognition, achievement, or personal growth, (Hackman & Oldham, 1976) and

* Hygiene factors; (e.g. status, job security, salary and fringe benefits) which do not give positive satisfaction, although dissatisfaction results from their absence. These are extrinsic to the work itself, and include aspects such as company policies, supervisory practices, or wages/salary (Hackman & Oldham, 1976)

So.. I would say that A-Rod would care little about the money unless it became a dissatisfier.. how would this happen.. say if someone else was got a contract that would pay them 7 million for the each milestone.

Kevin Gamble said...

Mitch,

I really appreciate your comments.

I'm thinking we don't often consider the dissatisfiers enough when setting up reward systems. Your exampe of A-Rod being dissatisfied is the perfect example. What effect did his new contract have on the rest of his teammates? By taking care of A-Rod did Yankee management not create some serious problems with the rest of the "team".

How much do you think the management considered the negative impacts of this deal beyond the monetary cost to the franchise? I'm going to guess that they didn't give this as much thought as it deserved.