Discussing a similar topic years ago, a wise CIO once gave me some advice that I still heed to this day. He told me that in order to encourage specific behavior in employees, a manager needs to incent that behavior. But money is usually not the primary motivating factor. Hence, the key is to listen to the employee and learn what specifically motivates him/her.

Putting this into practice, I found that some employees are motivated by public recognition, an extra day off to spend more time with their families or a little more autonomy over a project they’re working on. A reward that was a little more personal and met their specific needs went further in incenting positive behavior and making work something they disliked a little less.

I think the same root issue is at play here. When comparing Japanese to American workers, I think the American worker has lost that feeling of gratification and fulfillment that comes from being part of something bigger than one’s self. In the U.S., continuous improvement at work is usually someone else’s job. There are process engineers, analysts, QC people and ‘blackbelts’ to do that. We don’t feel like we are part of our companies and we don’t emotionally share in every little company success. We’re too concerned with trading our time for money and trying to get more for less.

In contrast, Japanese implementations of Lean and kaizen, for example, instill in the culture that it’s everyone’s job and responsibility, regardless of your role or rank on the totem pole, to improve whenever and wherever you can. There is a sense of pride in one’s work and contributing to continuous improvement that monetary incentives just cannot replace.

(I speculate this kind of motivation might be why some Americans choose to work for themselves, btw.)

But, we live in the U.S. where our culture demands we be compensated for our time and in proportion to our contribution. And I don’t see it changing anytime soon.

If I’m the intern and am offered no compensation or reward for my idea that makes the company $1 million, I will go start my own company or jump ship to a competitor for a big salary to reap profits from my future $1 billion idea.

I think there has to be a balance between intrinsic motivation and external rewards with employees, just as with children. Intrinsic sounds better on paper and is a good long term strategy.

On the flip side, is there a consequence for the employee whose laziness costs the company $1 million? Or do we wait patiently for the intrinsic magic motivation moment that never comes? If we do, what does that do to the morale of Janet Overachiever who tries to help the company, her ideas are implemented, and she never receives any financial bonus or promotion for it?

As a business owner, there are certain risks I take for new business that I would never ever take without the potential for financial reward. Income is not a sole reason for self employment. But life sure sucks without it.

You note that it seems like the intern with the million dollar idea deserves some kind of compensation for helping the company to make a million dollars. It certainly seems unfair at first glance to suggest that the intern should not receive any special compensation at work.

There are two specific issues at work, however. First, we want to be careful about creating intrinsic motivation. Employees need to be compensated, of course, but we should try to make sure that the work is more interesting than the money.

Second, there’s the question of fairness. Shouldn’t a reward from the million dollar idea go to the intern in the form of some kind of commission or bonus? Not unless that individual took on the risk in the first place. Coming up with new ideas was part of the job description and he or she was paid for that work. When you work for someone else for a steady paycheck, you’re taking very little risk. The worst-case scenario is that the company goes belly up and you lose two weeks pay. But when you start or invest in a company, you’re much more exposed. It’s the company shareholders who have taken on the risk. After all, they’ve invested in an employee whose ideas might have been worthless.

It’s true that many people are motivated by money. But that’s not the reason that most people go into business for themselves. In fact, studies show the complete opposite. People don’t tend to make more on average when they are self-employed, and are generally, less motivated by income! They do, however, have greater financial stress.

Finally, I do see your point that the intern in this situation may decide to leave for another opportunity. However, a smart employer will give them the chance to become an employee-owner and buy shares in their own organization. That way they can blend the risk/reward of having big ideas and security of a steady paycheck. Or, they can strike out on their own and take bigger chances.

What I do believe is that people should be compensated based on what they are supposed to deliver and not just time alone – not bonuses, but compensation. Although an individual approach is necessary, I believe people’s pay structure should be based on what they are to deliver (Productivity versus being Present).

I say if someone is unhappy with their job or pay – leave or negotiate better terms. Not keeping your brightest talent is a fault of the owner / manager but if people are paid based on hours they watch clocks. Ideas are a nature to be identified with – in other words “our people are the best in innovation” and not “our people are required”

Right or wrong, many people are motivated by money (that’s why we go into business for ourselves, instead of being a cog in someone else’s machine). Don’t reward them for ideas that put money in someone else’s pockets, and they’ll leave for an opportunity that will reward them for their creativity. Then, that idea-and-revenue generator goes somewhere else, and the company loses many millions more, because they were too stingy to cough up a few thousand bucks, or too short-sighted from listening to Matthew May.