We published this study back in 2011. We looked at over 900 studies, beginning in the 1940's and 1950's. Over 900 studies, that had examined the impact of leadership on team performance. We found that the leader of a team, accounts for 31% of whether that team performs well or not. Of the 31%, we looked at what are the most critical, most essential behaviors, that leaders are engaging in, that enable teams to perform well. And we found that the three behaviors you see here, were three of the most important. Note the first and most important, is to create and communicate a vision that provides that team a sense of shared direction and meaning. The behavior of creating and communicating a vision, accounted for over six percent. That one behavior, accounted for over six percent of the variation to whether teams perform well or not. Other behaviors that are important, structuring the team, roles, responsibilities, defining the intersections and points of interdependence.
The human energy is high because everyone is in conversation with one another, but it's not chitchat. It is actually the noise of work. And that noise of work becomes the self-reinforcing component of our culture where, in fact, people will, they will enjoy the serendipity of overhearing the ideas of others. And we want that to happen. One of the strongest rules we have at Menlo is you can't wear earbuds while you're working. You can't shut yourself off from other human beings. All of those components lend themselves to that human energy that people feel when they walk in the room.
Now a SMART goal is a framework that has a significant body of research behind it. [...] SMART is an acronym that stands for specific, measurable, agreed-upon, reasonable, and time bound.
Then what you see is when you combine the indirect extrinsic reward with intrinsic motivation you get a huge boost in terms of task performance. And so the implication for you as a team member, as a manager, is how can you leverage individual's intrinsic motivation. Really understand what they value, what they care about, and focus on those aspects. And then create indirect rewards. Not tied necessarily to their outcome, not pay for performance, but pay for engagement. Pay for engagement in the task, completion of the task. That, based on these data, is where we see the biggest positive impact on performance.
You want someone in your team to go above and beyond their formal job duty. You want them to volunteer to go above and beyond. The more you link a very explicit financial reward to the performance of that behavior, the less likely you're actually going to get it. That is a revolutionary insight that really shapes how we might motivate people using extrinsic rewards and intrinsic rewards, and so one conclusion that I want you to draw from this, is that rewarding people for an intrinsically interesting task, a task that, either naturally or because the person is naturally attracted to that type of work. If the person is intrinsically motivated to perform that task, and you emphasize the extrinsic rewards associated with them performing that task, you'll actually undermine the discretionary effort that you might be seeking.
Badges, for example, when you get a badge or an award. For example, the gold star effect, we call it. And organizations clearly are using money to motivate people. But there are very high profile organizations that are also using badges for example to motivate people. Amazon is a great example. Where on Amazon's internal IT computer system on the employee profiles you can go on and see any employee in the company and for their performance on different projects, different work assignments, and so on. Their managers can actually, and their peers even, can divvy out or give people badges or the equivalent of gold stars. And when you go and you look at any individual's profile within Amazon, you can actually see the badges and the gold stars, if you will, that they've collected. And employees in the organization take a lot of pride in the collection of these badges and gold stars. And so that's a great example of an organization who's using these badges and gold stars to actually motivate employees. Now for that to work and not seem, childish, if you will, is the employees really have to buy into the system. And so a lot of organizations will actually have the employees create the badge or the gold star system. So they're bought into it as opposed to the lead manager or the CEO or someone like that creating the system and dictating it down through the organization. That's an example of a practice you probably want to come from the bottom up. Other examples of extrinsic, the titles you give individuals, the corner office, things that really represent status in that regard. Those are great examples of extrinsic motivators. That organizations around the world use to motivate performance.
And so, what Bunderson and Thompson did is they interviewed a number of these zookeepers, asking them why they got into the field and trying to understand why these zookeepers saw this occupation as really a calling. Really a calling, an occupation that was filled with meaning. And what they found was this double-edged sword. That on the benefits, when you're in these occupations that you see as a calling, this deep sense of purpose and meaning [...] But at the same time, whether this is for yourself or for your employees, you need to understand that there's another side to that story. In these zookeepers, for example, they saw the occupation as a moral duty. They have a hard time leaving the occupation because they see their contributions to these animals as almost having a moral component, where they can't get out of this occupation, even if they want to. Because it's their moral obligation, their moral responsibility to stay in and contribute. They're willing to sacrifice pay, personal time, all of the comforts of life, and they feel almost trapped. And so, there's a lot of what's today called these high intensity, high commitment organizations. Often time, professional service firms, the consulting firms, the investment banking firms, are these organizations that people will commit to even though they don't really like the work as much. And they have a hard time getting out. This, here, is something different. This, here, is I have this deep sense of purpose, this deep sense of meaning, and as a result, I can't get out, even though the conditions are such that there's a big cost to me personally and professionally. And so again, just understand there's a double-edged sword to this concept of meaning. But at the end of the day, if you're looking for higher commitment, higher motivation, higher engagement among your team members, among your employees, the extent to which you can create a sense of meaning, a sense of purpose, you will in return get that higher level of motivation and engagement. And one really effective way to do that is to focus on the relevance, the importance of the tasks, the work they're doing. Help your employees understand why what they're doing at work matters.
One of the questions I often get asked is how do we create meaning at work? Where does this meaning come from? And so, I'll give you a couple of examples. One of the pieces of advice that I often give managers in organizations is to focus on the relevance of the work, the relevance of the task, to a bigger picture. How does my little task over here, in my team and my unit, enable the organization to achieve what it's trying to achieve? How does my individual task enable my team to be successful? For individuals, being able to see the connection between their individual contributions and the overall contribution of either the team or the organization is one way, really effective way, to create a sense of meaning and significance. And you, as a manager, have the opportunity to do that when you talk about the relevance or the importance of the work you're asking people to engage in, and being able to connect that to the broader purpose, the broader mission, the broader task of the team or the organization.
There's some studies that show that among all of the motivating factors that might motivate someone to perform at a high level at work, the significance of my work, the relevance, the meaning of my work, actually oftentimes is the number one motivating factor, ahead of pay, ahead of relationships with other people. Does my work matter? Does it mean something to people, the organization, and so on.
And what they found was really interesting. In that, as soon as you get that raise, you were making 50,000 and now you're gonna make 75,000. The question is what do you do with that money? And often times people go out and they buy a bigger house. They buy a fancier car. And, what happens is, our social comparison set actually changes. Now, we're no longer comparing ourselves to people who drive the Chevrolet or the Ford, we're comparing ourselves to the people who drive the Mercedes, or the Porsche. And, we're always seeming as if we don't have what we want. Same thing for the house, we move in to a nicer neighborhood, and the house around us is nicer than the one we have. And so, from a happiness perspective, we're always unhappy, even though we're making more money.
Remember only 13% of people across the globe rate themselves as engaged at work. That leaves 87% of people who are either not engaged or what we called actively disengaged. That's a very large number of people. If you have a team of ten, on average about eight of those individuals are either not engaged or actively disengaged.
So to address the folly, the first step is to understand what behaviors you're rewarding relative to what you're expecting at the company. [...] Long term growth verses short term profitability. Emphasizing innovation versus compliance. Teamwork versus individual rewards.
Why can't we align rewards and behaviors? There are two key culprits for this phenomenon. One is, our fascination with instant gratification. Always strive for instant gratification, that immediate pat on the back for delivering the short term results. And as you can see in many situations, that particular incentive structure can conflict with attaining long term growth and profitability of our companies. The pressure for short term results is now reinforced more so than ever before by Wall Street and the financial community which is increasingly dominated by short term investors. And the second reason for the folly is our fascination with objective metrics, data in which are easy to come by.
Now our phones is a great a example of a variable reinforcement schedule. And just like with gambling, we sometimes get addicted to or phones and iWatches, and hear this phantom buzzes and rings.
Phantom buzzes are a thing.
One of the reasons slot machines are so addictive is because they're based on the variable schedule of reinforcement. Specifically variable ratio schedule of reinforcement. What I mean by this is that the probability is constant. But the number of lever presses needed to win is variable.
This applies to a lot more things in life than slot machines.
In the words of B.F. Skinner, no one works on Monday morning because he is reinforced by a paycheck on Friday afternoon.
What if the paychecks were more frequent?