Philosophy #12: On Employee Motivation
What would you sacrifice for work? Why would you sacrifice for work?
It was 3 AM in a taxi on a dusty road coming from the Bangalore airport. I was traveling with my co-founder Paul Leydon, and it was the first time we’d been to this city which will soon become our company’s headquarters.
Suddenly, he asked me the following question:
Do you want to go skiing?
Strange question to open with at the time, I thought. But the conversation that ensued and the point that Paul was trying to get to was a more profound, more philosophical question about sacrifices for work and how that changes with life stage.
Speaking to me as the old guy in the company, the question Paul ultimately was getting to:
What are the things that I want to do at my stage in life that I can’t do because we’re trying to build an ambitious company together right now?
Is it skiing? Is it time with family? Is it learning a new hobby?
What are those things for me that I need to sacrifice at my stage in life?
Paul is in his early thirties. For him, it’s more about relationships, hobbies, dating, etc.
What is it for me?
Discussion On Employee Motivation
In an attempt to revisit the topic, which we discussed when we may have been too tired at the time, we recorded a follow-on conversation which I publish here below:
🎧 Listen on Spotify, Apple Podcasts, or Anchor
Joseph Kim, CEO at LILA Games
Paul Leydon, CCO at LILA Games
Since that discussion, I’ve had more time to further refine my thinking around this topic. Below, I share thoughts based on those previous discussions and now with the benefit of further contemplation.
Lack of Nuance
One fundamental problem in our society today is the lack of nuance and situational context. Too many people think about employee motivation from the simple perspective of just financial reward.
The standard view is that the founders of a company have more equity, therefore more to gain, and consequently, they are more motivated to work than anyone else. I also believe, in general, this is true but doesn’t tell the whole story.
Over my entire career, I’ve always worked. Equity or not. Recognition or not (usually not). Compensation or not.
The way that Paul puts it for him:
I worked as a founder until I became one.
Throughout my career, I can honestly say that I outperformed and made a lot of people lots of money without “fair” compensation. So why did I work so hard?
The answer is that it depends. And the point that people miss is that there are critical benefits that aren’t just about money.
The experience, developing skills, meeting the right people, building relationships, gaining critical insights, reputation, building something you’re proud of, working on something meaningful. These are benefits that sometimes are worth exponentially more than their weight in gold.
Critical Factors of Motivation For Employees To Work Hard
I’m a PM by nature. So, in an attempt to better characterize the primary factors of motivation for employees to work hard, I came up with the following framework below:
In my experience, I have seen people motivated by these factors, or a combination of factors, to different degrees, at different times.
What factor or combination of factors motivates you?
Of these factors, I believe the most potent motivating factor is desperation. It’s what drives me today - getting old, running out of time, running out of money. These problems can sometimes be a startup’s greatest gifts.
Desperation is one of the most significant advantages of a small startup vs. the bigger, better-resourced, more talented big company. Small startups will act because they must, confront problems because it's existential, have the hard conversations, fire the people, and do the necessary work in half the time because there is no other choice.
Do or die.
Paul thinks about motivation more from the enablement of a specific fantasy. In his view, people have a particular image of the kind of person they want to be or about something they wish to have.
What are the fantasies that drive motivation?
A professional basketball player may have a fantasy of being adored by the public and showing off in front of a national TV audience. A young designer may fantasize about bragging to friends about a game they worked on and showing it off. A young entrepreneur may dream of becoming filthy rich. These images of specific outcomes may be the fantasies that drive motivation in people.
Explaining Motivation to Employees
The ability to tie an employee’s motivational fantasy or the specific motivation factors for an employee to do the work is something I believe has not been thought about well enough. Instead, there seems to be an over-excessive focus and a simplistic view on compensation.
Leaders should understand what motivates a particular employee. I believe there need to be more ways of tying motivations to work (the reason they want to work) with the actual work itself. Enabling employee motivational fantasies or factors will help drive maximal work performance.
If an employee wants to do the work to learn and be the best, help facilitate meetings with the best in the industry, pay for training, and allow them to grow. If an employee seeks prestige, feature the employee on the company's website or at company meetings based on high performance. And, if an employee wants more financial rewards, don't be afraid to pay them non-linearly, based on the performance and value they provide.
A good leader will understand the person, then build a map and show the path from their work to what their motivating factor(s) are.
Systems for Motivation
Much of the discussion thus far has focused on the employees. But the other perspective has to do with the company and the systems that leaders build to incentivize employees to do the work.
As Charlie Munger states:
Show me the incentive and I will show you the outcome.
In a famous example, Munger demonstrates this concept by a specific example of incentives applied at Federal Express:
The heart and soul of the integrity of the system is that all the packages have to be shifted rapidly in one central location each night. And the system has no integrity if the whole shift can’t be done fast. And Federal Express had one hell of a time getting the thing to work.
And they tried moral suasion, they tried everything in the world, and finally somebody got the happy thought that they were paying the night shift by the hour, and that maybe if they paid them by the shift, the system would work better. And lo and behold, that solution worked.
The Shanghai-based games studio Lilith paid employees an extra day's salary for working additional days on weekends.
What systems can you design to achieve the outcomes you seek?
The Opportunity Rooster Coop
One of the most tragic experiences for me here in Bangalore was walking the streets and meeting some people I know could be so much more.
From children on the streets to people I meet in daily life, and even some of our employees, they don't know what they don't know.
No one has provided them with examples of possible fantasies or taught them they could be more. Even further, no one has shown them a map to get there.
It reminds me so much of the importance of the mission we are on for our company and from Balram's book and the movie: The White Tiger.
You were looking for the key for years, but the door was always open.
I believe someone will spend even just one or two years at LILA Games, and we will change the trajectory of their life and the prosperity of their future generations forever.
The other side of sacrifice is opportunity.