In my last article, I looked at how the attempt to increase profits motivates people. Sometimes it leads to the wrong behaviour, but most of the time, especially in a competitive environment where customers have real choices, it leads to the right behaviour. This is the reason why I so rarely have worked with non-profits; they so often have a strong disincentive to improve.
Jeffrey L. Minch, a longtime entrepreneur, CEO, and professional executive coach, pointed out in an extremely insightful comment:
“Profit motives make the world go round. You just have to figure out what currency you’re trading in.”
I am a lifelong student of incentives and motivations. I constantly use them in my practice to help clients figure out:
- How to encourage desired behaviours and outcomes from employees;
- Why customers behave a certain way;
- How to align sales with the rest of the company;
- Just about everything people do inside, outside and in relation to the company.
But as a consultant mostly to for-profit businesses, I am used to looking at financial incentives as a key part of the picture: price for customers; salary and bonus for employees; benefits. Sure, I always look at intrinsic motivators like pride, promotion, recognition, emotional needs, but these are part of the picture. The primary currency is, well, cash.
Jeff correctly points out that in places where cash is by definition not a primary currency, like non-profits and government, where the “non-profitness” is imbued in the very DNA and culture of the place, the lack of cash profit motive creates an absence, and nature abhors a vacuum. The gap will be filled, but by a currency other than cash. Once you understand what that currency is, you can understand the incentives and motivators of the employees, customers and other stakeholders.