Who’s NOT a Creative?

 

Compensting sales
Close-up Of A Business Woman Giving Cheque To Her Colleague At Workplace In Office. Andrey Popov/Shutterstock

25 July 2018 – Last week I made a big deal about the things that motivate creative people, such as magazine editors, and how the most effective rewards were non-monetary. I also said that monetary rewards, such as commissions based on sales results, were exactly the right rewards to use for salespeople. That would imply that salespeople were somehow different from others, and maybe even not creative.

That is not the impression I want to leave you with. I’m devoting this blog posting to setting that record straight.

My remarks last week were based on Maslow‘s and Herzberg‘s work on motivation of employees. I suggested that these theories were valid in other spheres of human endeavor. Let’s be clear about this: yes, Maslow’s and Herzberg’s theories are valid and useful in general, whenever you want to think about motivating normal, healthy human beings. It’s incidental that those researchers were focused on employer/employee relations as an impetus to their work. If they’d been focused on anything else, their conclusions would probably have been pretty much the same.

That said, there are a whole class of people for whom monetary compensation is the holy grail of motivators. They are generally very high functioning individuals who are in no way pathological. On the surface, however, their preferred rewards appear to be monetary.

Traditionally, observers who don’t share this reward system have indicted these individuals as “greedy.”

I, however, dispute that conclusion. Let me explain why.

When pointing out the rewards that can be called “motivators for editors,” I wrote:

“We did that by pointing out that they belonged to the staff of a highly esteemed publication. We talked about how their writings helped their readers excel at their jobs. We entered their articles in professional competitions with awards for things like ‘Best Technical Article.’ Above all, we talked up the fact that ours was ‘the premier publication in the market.'”

Notice that these rewards, though non-monetary. were more or less measurable. They could be (and indeed for the individuals they motivated) seen as scorecards. The individuals involved had a very clear idea of value attached to such rewards. A Nobel Prize in Physics is of greater value than, say, a similar award given by, say, Harvard University.

For example, in 1987 I was awarded the “Cahners Editorial Medal of Excellence, Best How-To Article.” That wasn’t half bad. The competition was articles written for a few dozen magazines that were part of the Cahners Publishing Company, which at the time was a big deal in the business-to-business magazine field.

What I considered to be of higher value, however, was the “First Place Award For Editorial Excellence for a Technical Article in a Magazine with Over 80,000 Circulation” I got in 1997 from the American Society of Business Press Editors, where I was competing with a much wider pool of journalists.

Economists have a way of attempting to quantify such non-monetary awards called utility. They arrive at values by presenting various options and asking the question: “Which would you rather have?”

Of course, measures of utility generally vary widely depending on who’s doing the choosing.

For example, an article in the 19 July The Wall Street Journal described a phenomenon the author seemed to think was surprising: Saudi-Arabian women drivers (new drivers all) showed a preference for muscle cars over more pedestrian models. The author, Margherita Stancati, related an incident where a Porche salesperson in Riyadh offered a recently minted woman driver an “easy to drive crossover designed to primarily attract women.” The customer demurred. She wanted something “with an engine that roars.”

So, the utility of anything is not an absolute in any sense. It all depends on answering the question: “Utility to whom?”

Everyone is motivated by rewards in the upper half of the Needs Pyramid. If you’re a salesperson, growth in your annual (or other period) sales revenue is in the green Self Esteem block. It’s well and truly in the “motivator” category, and has nothing to do with the Safety and Security “hygiene factor” where others might put it. Successful salespeople have those hygiene factors well-and-truly covered. They’re looking for a reward that tells them they’ve hit a home run. That is likely having a bigger annual bonus than the next guy.

The most obvious money-driven motivators accrue to the folks in the CEO ranks. Jeff Bezos, Elon Musk, and Warren Buffett would have a hard time measuring their success (i.e., hitting the Pavlovian lever to get Self Actualization rewards) without looking at their monetary compensation!

The Pyramid of Needs

Needs Pyramid
The Pyramid of Needs combines Maslow’s and Herzberg’s motivational theories.

18 July 2018 – Long, long ago, in a [place] far, far away. …

When I was Chief Editor at business-to-business magazine Test & Measurement World, I had a long, friendly though heated, discussion with one of our advertising-sales managers. He suggested making the compensation we paid our editorial staff contingent on total advertising sales. He pointed out that what everyone came to work for was to get paid, and that tying their pay to how well the magazine was doing financially would give them an incentive to make decisions that would help advertising sales, and advance the magazine’s financial success.

He thought it was a great idea, but I disagreed completely. I pointed out that, though revenue sharing was exactly the right way to compensate the salespeople he worked with, it was exactly the wrong way to compensate creative people, like writers and journalists.

Why it was a good idea for his salespeople I’ll leave for another column. Today, I’m interested in why it was not a good idea for my editors.

In the heat of the discussion I didn’t do a deep dive into the reasons for taking my position. Decades later, from the standpoint of a semi-retired whatever-you-call-my-patchwork-career, I can now sit back and analyze in some detail the considerations that led me to my conclusion, which I still think was correct.

We’ll start out with Maslow’s Hierarchy of Needs.

In 1943, Abraham Maslow proposed that healthy human beings have a certain number of needs, and that these needs are arranged in a hierarchy. At the top is “self actualization,” which boils down to a need for creativity. It’s the need to do something that’s never been done before in one’s own individual way. At the bottom is the simple need for physical survival. In between are three more identified needs people also seek to satisfy.

Maslow pointed out that people seek to satisfy these needs from the bottom to the top. For example, nobody worries about security arrangements at their gated community (second level) while having a heart attack that threatens their survival (bottom level).

Overlaid on Maslow’s hierarchy is Frederick Herzberg’s Two-Factor Theory, which he published in his 1959 book The Motivation to Work. Herzberg’s theory divides Maslow’s hierarchy into two sections. The lower section is best described as “hygiene factors.” They are also known as “dissatisfiers” or “demotivators” because if they’re not met folks get cranky.

Basically, a person needs to have their hygiene factors covered in order have a level of basic satisfaction in life. Not having any of these needs satisfied makes them miserable. Having them satisfied doesn’t motivate them at all. It makes ’em fat, dumb and happy.

The upper-level needs are called “motivators.” Not having motivators met drives an individual to work harder, smarter, etc. It energizes them.

My position in the argument with my ad-sales friend was that providing revenue sharing worked at the “Safety and Security” level. Editors were (at least in my organization) paid enough that they didn’t have to worry about feeding their kids and covering their bills. They were talented people with a choice of whom they worked for. If they weren’t already being paid enough, they’d have been forced to go work for somebody else.

Creative people, my argument went, are motivated by non-monetary rewards. They work at the upper “motivator” levels. They’ve already got their physical needs covered, so to motivate them we have to offer rewards in the “motivator” realm.

We did that by pointing out that they belonged to the staff of a highly esteemed publication. We talked about how their writings helped their readers excel at their jobs. We entered their articles in professional competitions with awards for things like “Best Technical Article.” Above all, we talked up the fact that ours was “the premier publication in the market.”

These were all non-monetary rewards to motivate people who already had their basic needs (the hygiene factors) covered.

I summarized my compensation theory thusly: “We pay creative people enough so that they don’t have to go do something else.”

That gives them the freedom to do what they would want to do, anyway. The implication is that creative people want to do stuff because it’s something they can do that’s worth doing.

In other words, we don’t pay creative people to work. We pay them to free them up so they can work. Then, we suggest really fun stuff for them to work at.

What does this all mean for society in general?

First of all, if you want there to be a general level of satisfaction within your society, you’d better take care of those hygiene factors for everybody!

That doesn’t mean the top 1%. It doesn’t mean the top 80%, either. Or, the top 90%. It means everybody!

If you’ve got 99% of everybody covered, that still leaves a whole lot of people who think they’re getting a raw deal. Remember that in the U.S.A. there are roughly 300 million people. If you’ve left 1% feeling ripped off, that’s 3 million potential revolutionaries. Three million people can cause a lot of havoc if motivated.

Remember, at the height of the 1960s Hippy movement, there were, according to the most generous estimates, only about 100,000 hipsters wandering around. Those hundred-thousand activists made a huge change in society in a very short period of time.

Okay. If you want people invested in the status quo of society, make sure everyone has all their hygiene factors covered. If you want to know how to do that, ask Bernie Sanders.

Assuming you’ve got everybody’s hygiene factors covered, does that mean they’re all fat, dumb, and happy? Do you end up with a nation of goofballs with no motivation to do anything?

Nope!

Remember those needs Herzberg identified as “motivators” in the upper part of Maslow’s pyramid?

The hygiene factors come into play only when they’re not met. The day they’re met, people stop thinking about who’ll be first against the wall when the revolution comes. Folks become fat, dumb and happy, and stay that way for about an afternoon. Maybe an afternoon and an evening if there’s a good ballgame on.

The next morning they start thinking: “So, what can we screw with next?”

What they’re going to screw with next is anything and everything they damn well please. Some will want to fly to the Moon. Some will want to outdo Michaelangelo‘s frescos for the ceiling of the Sistine Chapel. They’re all going to look at what they think was the greatest stuff from the past, and try to think of ways to do better, and to do it in their own way.

That’s the whole point of “self actualization.”

The Renaissance didn’t happen because everybody was broke. It happened because they were already fat, dumb and happy, and looking for something to screw with next.

What’s So Bad About Cryptocurrencies?

15 March 2018 – Cryptocurrency fans point to the vast “paper” fortunes that have been amassed by some bitcoin speculators, and sometimes predict that cryptocurrencies will eventually displace currencies issued and regulated by national governments. Conversely, banking-system regulators in several nations, most notably China and Russia, have outright bans on using cryptocurrency (specifically bitcoin) as a medium of exchange.

At the same time, it appears that fintech (financial technology) pundits pretty universally agree that blockchain technology, which is the enabling technology behind all cryptocurrency efforts, is the greatest thing since sliced bread, or, more to the point, the invention of ink on papyrus (IoP). Before IoP, financial records relied on clanky technologies like bundles of knotted cords, ceramic Easter eggs with little tokens baked inside, and that poster child for early written records, the clay tablet.

IoP immediately made possible tally sheets, journal and record books, double-entry ledgers, and spreadsheets. Without thin sheets of flat stock you could bind together into virtually unlimited bundles and then make indelible marks on, the concept of “bookkeeping” would be unthinkable. How could you keep books without having books to keep?

Blockchain is basically taking the concept of double-entry ledger accounting to the next (digital) level. I don’t pretend to fully understand how blockchain works. It ain’t my bailiwick. I’m a physicist, not a computer scientist.

To me, computers are tools. I think of them the same way I think of hacksaws, screw drivers, and CNC machines. I’m happy to have ’em and anxious to know how to use ’em. How they actually work and, especially, how to design them are details I generally find of marginal interest.

If it sounds like I’m backing away from any attempt to explain blockchains, that’s because I am. There are lots of people out there who are willing and able to explain blockchains far better than I could ever hope to.

Money, on the other hand, is infinitely easier to make sense of, and it’s something I studied extensively in MBA school. And, that’s really what cryptocurrencies are all about. It’s also the part cryptocurrency that its fans seem to have missed.

Once upon a time, folks tried to imbue their money (currency) with some intrinsic value. That’s why they used to make coins out of gold and silver. When Marco Polo introduced the Chinese concept of promissory notes to Renaissance Europe, it became clear that paper currency was possible provided there were two characteristics that went with it:

  • Artifact is some kind of thing (and I can’t identify it any more precisely than with the word “thing” because just about anything and everything has been tried and found to work) that people can pass between them to form a transaction; and
  • Underlying Value is some form of wealth that stands behind the artifact and gives an agreed-on value to the transaction.

For cryptocurrencies, the artifact consists of entries in a computer memory. The transactions are simply changes in the entries in computer memories. More specifically, blockchains amount to electronic ledger entries in a common database that forever leave an indelible record of transactions. (Sound familiar?)

Originally, the underlying value of traditional currencies was imagined to be the wealth represented by the metal in a coin, or the intrinsic value of a jewel, and so forth. More recently folks have begun imagining that the underlying value of government issued currency (dollars, pounds sterling, yuan) was fictitious. They began to believe the value of a dollar was whatever people believed it was.

According to this idea, anybody could issue currency as long as they got a bunch of people together to agree that it had some value. Put that concept together with the blockchain method of common recordkeeping, and you get cryptocurrency.

I’m oversymplifying all this in an effort to keep this posting within rational limits and to make a point, so bear with me. The point I’m trying to make is that the difference between any cryptocurrency and U.S. dollars is that these cryptocurrencies have no underlying value.

I’ve heard the argument that there’s no underlying value behind U.S. dollars, either. That just ain’t so! Having dollars issued by the U.S. government and tied to the U.S. tax base connects dollars to the U.S. economy. In other words, the underlying value backing up the artifacts of U.S. dollars is the entire U.S. economy. The total U.S. economic output in 2016, as measured by gross domestic product (GDP) was just under 20 trillion dollars. That ain’t nothing!