Avoiding Individual Gainshare. Laura Handler, Director of VDC,
One of my clients emailed me last month with this question:
We’re considering implementing a framework that applies not only to the different stakeholders on an IPD project, but actually attempts to figure out gain share formulas down to the individuals who participated and worked on the project.
Does this sound like it can even work, at the individual level?
I provided an initial response, but now that I’ve been able to synthesize a number of motivation theories, I have an update.
At Tocci we discuss this topic quite a bit. Currently, we don’t offer any project-based bonuses – regardless of contract form. Anecdotally, we’ve seen financial bonuses hurt performance rather than improve it. Recently, Daniel Pink’s Drive highlighted studies with the same conclusion. Moreover, the reason the incentive pool motivates individual companies to work as a team is the shared risk and reward, not just shared reward.
While the discussion is still open, we have vetoed bonuses on all projects to date. At the same time, we keep the question open. We want to include individual team members in the incentive pool. However, we just want to motivate team members. The more relevant question is likely: how can we motivate individuals to perform in an IPD contract?
To answer that question, we need to explore practical theories of motivation, from Maslow to Herzberg to Vroom to Pink.
1943 Maslow: After the basics are covered, motivation comes from team, recognition and then achievement and stimulation
1959 Herzberg: Extrinsic factors (i.e. salary, conditions) prevent dissatisfaction; intrinsic factors (i.e. achievement, responsibility and growth) increase satisfaction
1964 Vroom: Motivation requires expectation that effort leads to a goal that produces desirable results
2011 : Motivation comes from mastery, autonomy and purpose
Note that each theory boils down to a similar principle: take care of the basics, create a sense of purpose and give teams the flexibility to achieve it. To apply these theories, channel each of these researchers and ask yourself:
- First and foremost, have we covered the basics –salary, fringe benefits, comfortable and safe environment? [Maslow’s ‘Hygiene Needs” and Herzberg’s “Extrinsic factors”]
- Is there opportunity to motivate the individuals on this project? More specifically, will their effort lead to the needed performance? Will their performance result in a desired result? Will the results increase their satisfaction? [Vroom] At the same time, are there enough challenges in the project? Can individuals learn and grow [Pink and Mastery; Herzberg’s “Intrinsic Factors”]
- The structure of IPD incentivizes team leadership to create an integrated team. Is our leadership doing enough to create a cohesive team environment? Is there more we could do? Have we included the team in creating the environment? [Maslow’s “Sense of Team”]
- Construction projects tend to be purposeful since there is a clear goal: a finished building. Have we communicated the budget, schedule and quality goals to the team? What about the more detailed goals related to the profit pool? Have we aligned their tasks and work to individual goals? Are we communicating goal status to the team? [Pink and Purpose; Maslow’s “Achievement”]