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Friday, April 11, 2008

Is $6,000 an Incentive?

Talk about Yahoo offering additional signing bonuses to lure engineers to their AMP project got me to thinking. (Assuming the tipster's information is true over at Valleywag, which it might not be.)

In a new book by Ori Brafman and Rom Brafman, Sway: The Irresistible Pull of Irrational Behavior, incentives that target the pleasure centers of the brain are stacked up against those that relate to the altruistic, helping, other-directed part of the brain.

According to the authors, even small pleasure-directed incentives begin to crowd out other-directed, helping motivations. So when money is introduced as a key incentive, it removes the powerful helping motivations from the equation, at least when it comes to what makes us feel attracted to something. The problem is, the amount of pleasure we get from cash is only significant enough to act as a solid motivator when that cash amount is extremely high - however that might be defined for a given individual.

One of the simplest examples the authors give is a friend asking you to move. You expect the beer and pizza, but otherwise, the chances of you helping out are basically tied to your team spirit and sense of obligation to a friend. What if your pal offers you $10 to spend your day helping? It's an insult! To many of us, $100 would still be an insult. You'd start to wonder why moving this guy is so hard that he has to pay $100. Depending on your financial situation, you might start to perk up and consider helping out at a higher dollar figure. Or if there was a promise of a really great party afterwards.

By and large, engineering jobs in Silicon Valley pay a lot. The money is without question a motivator -- to get your training or degree, and to come to Silicon Valley and work long hours. Once there, incremental financial incentives would need to be large to influence someone's life decisions. A few qualified people might go for small pay increases for really practical reasons, like personal debt. Many others would need to be shown either a $25,000 or $50,000 signing bonus, or something else entirely - like a clear and compelling vision. If you offer a low bonus, your brain stops thinking about the vision, but doesn't respond to the stimulus of the money.

Many technology companies are brilliant at conveying visions of great products, molding the future, working with great people, and more. I hope that's why you're in your job! But if there is any situation that doesn't lend itself to the "vision thing," it's going to work for a project that might soon be eliminated or radically altered by a merger.

On the whole, post-merger implementation hinges on the ability to retain quality personnel. An overall sense of "join us, we're building the next thing," is paramount. Things have great potential to turn sour if the message is: "Welcome to our restructuring phase. Please feel insecure for the next 18 months."

If you want second-rate people and caretaker types to come work for you, ignore the compelling vision thing at your peril, or be prepared to pay through the nose to lure top talent.

Posted by Andrew Goodman




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