Motivational theory is separated into two camps, the Agency Theory (Incentive Theory) camp and the Two Factor Theory camp. Every performance incentive or bonus program is an example of the Agency Theory at work. Agency theory was popularized by two economists (Jensen & Meckling) in 1976 who concluded that managers do not always act in the best interest of shareholders (OMG!). Jensen and Meckling argued if you want managers to behave differently, compensate them according to the behavior you are trying to elicit. This theory effectively delegated management to a formula (Source: Clayton).
Steven Levitt, co-creator of Freakonomics, famously put Jensen & Meckling’s theory to work when trying to potty train his three year old daughter, Amanda. After struggling to achieve the desired behavior, Levitt provided Amanda with a bag of her favorite treat (M&M’s) every time she successfully used the potty. After 3 days Levitt’s daughter was able to tinkle on command to collect her favorite treat at will (see Youtube video below).
The example of a three old exploiting her father’s incentive system to rob him of her favorite treats is cute, but is an example of what occurs everyday in the corporate world. Clever individual’s will exploit incentive systems to maximize their personal gain (see this post). I like to refer to this as the “Ship it! We’ll worry about it when it comes back” attitude, where quality is often tossed aside in an effort to maximize short term gains. When the incentive system is applied to safety goals, injuries will go unreported and the game can become increasingly dangerous.
Herzberg’s Two Factor Theory takes a more complex approach to motivation. Herzberg concluded that satisfaction and dissatisfaction are not on the same continuum. Herzberg found that there are motivating factors which lead to satisfaction and Hygiene Factors which lead can lead to dissatisfaction. The best case scenario for hygiene factors is “no dissatisfaction”. Thus, the opposite of satisfaction is not dissatisfaction.
Examples of Motivating factors include:
- Challenging Work
- Personal Growth
Examples of Hygiene factors include:
- Job Security
- Work Conditions
What we can learn from studying Herzberg’s theory is that motivation is more complex than simply incentivizing the right behavior. Though the hygiene factors must be “right” to prevent dissatisfaction, motivation requires individuals to have a mission and purpose. My favorite example of this lesson is the story of John F. Kennedy and the NASA janitor. When asked by the President what he “did for NASA”, the janitor’s response, “I am putting a man on the moon” (link).