This has been a great conference. I am quite honored to be the last person who is going to speak to you. We are going to talk a little bit about employee contracts. We are going to talk about how organizations can incentivize and motivate. So, what is wrong with the current model? Well, it is quite simple, really: it does not work. How does it not work? Number one, every study tells us that bonuses do not work. Bonuses have not worked for the last 30 years, and there is no difference between agile organizations and non-agile organizations. They do not work. There is an exception: if you have an organization where people are not being paid enough, then yes, bonuses do work. But we are assuming everyone is on a decent salary, which in knowledge work, software development, and so forth, means that bonuses are not a motivating factor. Number two, agile organizations are generally flat. Yes, we spoke about self-management, completely flat organizations, but even companies like SAP, or IBM, where I used to work, are slowly getting rid of layers of management. So, what does that mean for promotions? If we are going to be incentivized, and we do not have bonuses, and we do not have promotions... Very quickly, first of all, it comes down to motivation. Principle number one: all motivation is intrinsic, which means I cannot motivate you; I cannot give you motivation; it comes from within. This is called the Reiss profile, or Reiss model. This was based on a series of research studies that looked at the 16 desires that every person in the world has, and these motivations are present to a greater or lesser extent. You can Google "Reiss profile" now. What does this mean for HR? I cannot motivate you, but I can incentivize you based on your intrinsic motivation.
We brought together a collection of thought leaders in the agile HR space. I hate that term, by the way, but I will use it nonetheless. These people did literature research; we looked at what was out there in the market, what the best practices were from companies, and we synthesized this into a series of principles. People want purpose. They want to know that what they are doing has a goal, is achieving something. Whatever that something is does not really matter; they just want to feel like they are a part of it. They want fairness. Two people doing the same job should get similar pay; they do not want to be paid differently if they are doing the same work. They want transparency. They want to know what they are going to get, and how and when they are going to get it. No ambiguity. They want to develop. They want to learn; they want to grow. If you do not give them growth opportunities, they will find them in another organization. They want recognition. One of the key motivating factors that people have is recognition for the work that they do. This could be public, such as standing up here. Status is a high motivating factor for me. I like having people go, "Hey, Evan, you are a great person; I love what you are talking about." That makes me feel good.
People want compensation. If they do not get paid, that is kind of obvious. People want consistency. Year to year, people like to know that if they do the same job, they are going to get paid the same. People want health and happiness. That is kind of straightforward. I am about to run out of time, because the doors are opening.
Some practices, very quickly. Number one, transparent salary format. What does that mean? That means that you know exactly how your salary is calculated. You know how his salary is calculated; you know how his and her salaries are calculated. There are some organizations that go even further and publish everyone's salary. So, there is complete transparency. That is an extreme case; not all organizations will go that far.
Pay above market. Bonuses are not a very good motivator, but we do recommend that when you create a bonus, it should be the same number, not a percentage. You do not get 3% of your salary, and you get 3% of your salary; you get a thousand dollars, and you get a thousand dollars. That is much fairer, and it has a greater motivating factor for everybody, especially those at the lower levels of the organization, when they know that the CEO is going to get the same amount that they are going to get.
Growth and promotion. At our organization, promotion is different to in a non-agile organization, because we disconnect management from promotion. I could be a junior developer, then a developer, then a senior developer, without ever having to manage a single person. An agile organization means that I can be promoted, I can get that status and that extra title, without actually going up in the organization. I get more responsibilities related to my role, but I do not manage people, which is great, because we have fewer managers in an agile organization.
Education and training. I think that is kind of obvious. Additional benefits. What is that? That is everything from healthcare and additional leave benefits, the ability to take paternity leave or parental leave, just stuff to make our lives easier. Those can be used as incentives. Public recognition. I touched on that. Lastly, gifts.
How much time do I have? I have a couple of minutes. Gifts are interesting. The research shows that if you give a $1,000 bonus, it has a small motivating factor. If you say, "If we succeed on this project, I am going to take you and your family, and you and your family, everyone on my project team, we are going to go to Italy for a weekend." So, I am going to spend a thousand bucks on each of you. That gift of that holiday has a much greater motivating factor than the cash. The great thing about this is, it goes back to the Reiss drivers. If I have family as a motivating factor, this gift encourages family. If I have status, that is recognition. So, right there...
We have done a white paper on this, if anyone would like to download it. Email me, and I will send you the link to download the white paper. There is the link. Download the white paper. Come and have a chat with me.