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The secret to leading high-performance teams? Emphasize purpose over pay

Why psychologist Barry Schwartz says it’s time to look beyond financial incentives to effectively motivate employees

Employee engagement is not only critical to successful business outcomes, feeling gratified by our work is an essential part of leading a fulfilling life and is something everyone deserves. However, even with a recent focus on boosting engagement in organizations, it remains a widespread problem, with more than half of U.S. employees reportedly feeling disengaged in the workplace.

“It’s a criminal waste of, in some sense, the most valuable resource we have, which is other human beings,” says Barry Schwartz, emeritus professor of psychology at Swarthmore College, and visiting professor at Berkeley’s Haas School of Business.

Schwartz attributes this persistent lack of engagement to financial incentives – not inadequate pay, but rather a misplaced and almost tunnel-vision focus on using wages to motivate employees. An author and frequent TED speaker who specializes in the human side of economics, Schwartz’s book Why We Work is based on his popular TED Talk that attempts to dispel the myth that people are primarily driven by material incentives.

“I would say businesses have organized themselves to focus almost entirely on pay and ignore everything else because

[supposedly]

nothing else matters,” says Schwartz. “People won’t work if they don’t get paid – they have to make a living – but they care about a lot of other things and they will sacrifice pay for those other things.”

Schwartz says business leaders should look beyond financial incentives to what really drives employee engagement and job satisfaction, such as giving workers autonomy, allowing people to meet new challenges and gain mastery, providing a positive social environment, and, perhaps most importantly, ensuring employees find meaning and purpose in their work.

“We have the power to create the kind of organizational structure and culture that will enable people to thrive,” he says. “It’s in our hands collectively to make workplaces good places for people to be, and if we do that, people will clamor to be a part of the organization.”

So, how can leaders foster the kind of purpose and meaning in work that inspires people to great achievement?

Put purpose at the forefront

Most jobs exist to improve the lives of other people in some way. This should be front of mind for your workforce, says Schwartz. Leaders should continually remind employees of their true purpose for getting out of bed every day – not just for a paycheck, but to help other people. To make someone’s life better. Even to make the world a better place.

Schwartz recalls a memorable real-life example of the power or purpose shared by fellow psychologist and TED speaker Adam Grant. A group of college students earning $10 an hour by soliciting scholarship-fund contributions from alumni were having a terrible success rate. Morale was low. So, Grant brought in a former student to deliver a five-minute speech about how this college had changed his life, and how he couldn’t have attended the school without the scholarship.

After discovering their purpose, says Schwartz, these students more than tripled the amount of donor contributions. Now, they were not just making calls to ask people for money, they were changing the lives of future students.

Rethink your business model

Creating an environment in which employees can actually achieve the purpose of improving people’s lives requires a complete paradigm shift. For those with the power to make sweeping structural changes within organizations or to launch new enterprises, Schwartz suggests a new business model that would tolerate workers “selling less” while requiring them to think more about why they’re working, other than a paycheck.

This model would de-emphasize individual rewards for performance and instead emphasize the purpose of the work at hand and the success of the organization as a whole. In other words, succeed together or fail together, but always put the customer or client first.

Walk the walk

While motivational speeches about purpose at the annual company retreat are well and good, it’s essential for business leaders to “live that truth,” not just deliver platitudes and revert back to business as usual. Continuing to push financial rewards to motivate employees is easier, but it misses the point of why we work entirely.

“Incentives are just substitutes for the much harder job of selecting or shaping your workforce so that they want to do the right thing for the right reasons,” says Schwartz, who notes that no incentives could ever replace the motivating force of people simply wanting to do the right thing because it is the right thing to do.

“You’ll end up with a much more satisfied workforce, which, by the way, will also become a much more productive workforce,” he says. “So you will end up making more money, not less. By emphasizing making money less, you will end up making more money and people will want to show up.”

By emphasizing purpose over profit in every aspect of business, leaders can more effectively motivate high-performance teams and build thriving organizations.

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