Thursday, June 27, 2013

PwC Survey underlines the psychology in Behavioral Advantage


PwC recently conducted a survey which showed things about senior executives’ behavior that would actually apply to most workers.  PwC’s conclusions might have come right out of our work around Behavioral Advantage.  

How executives actually behave does not match the behavior implicitly assumed in many of today’s incentive structures.  

Their six survey conclusions around executive behavior apply more broadly to the general employee population.  1) People are risk averse when it comes to their pay.  They like certainty in their pay structures.  2) People don’t like complexity and ambiguity in their pay. 
If bonuses are allocated by capricious managers, they can become a disincentive and cause employee disengagement -- just the opposite of the company’s intention.  If long term vesting structures are complex, most employees will not find them motivating.  Which brings us to #3) The longer you have to wait for pay, the less that pay is worth.  The PwC study suggests that if the time horizon is three years the value is discounted by half. 4) Fairness is fundamental.  This is a little surprising coming from the most highly paid among us.  Nevertheless, senior executives, like the rest of us keep score.  This makes it nearly impossible to structure incentive pay that’s guaranteed to produce motivation rather than demotivation, scorekeeping makes it a crap-shoot. 5) Job content matters.  Executives would take a pay cut for the right job content.  In Behavioral Advantage, we talk about this in terms of relationships, meaning and identity.  The last conclusion heartened us the most: 6) Executive, like the rest of us, want an identity -- to be seen as a key member of an elite group.  They also want to do meaningful work by getting worthy results.  These two things are key for any employee motivation.

We state this over and over again: “You must pay your people well.  If you don’t, then nothing else is going to make for a good employee engagement initiative.  Assuming you pay them well, you must provide the right identity, the right meaning, and the right relationships for everyone to be fully engaged in the company.”  
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