<b>Book Extract:</b> What employees really want

Smart managers recognise their employees as fully mindful human beings who care about doing a good job instead of seeing them as lesser minds who care only about getting a paycheck, says a new book

Leaders have two kinds of incentives at their disposal: intrinsic and extrinsic. Intrinsic incentives are any inherent to the job itself, such as the pleasure of accomplishing something worthwhile, learning new things, developing skills, or feeling proud about your work. Extrinsic incentives are outcomes that are separable from the job itself, such as getting paid, earning fringe benefits, getting a bonus, or having job security. Notice that the effect of extrinsic incentives on other people can be observed directly because it involves an obvious exchange of goods for services, whereas the impact of intrinsic incentives can really only be felt and experienced on the inside. You can see that both you and others work harder when money is at stake, but the metrics of pride and meaning and a sense of self-worth are emotional states that you feel rather than see. As a result, you can recognize intrinsic motivations more easily in yourself than in others.

By thinking that their employees have simplistic motives, bosses overlook the actual depth of their employees' minds and therefore fail to offer their workers what really motivates them. To see how bosses could do better, consider the pseudo experiment accidentally conducted at a General Motors plant in Fremont, California, in the late 1970s. The Fremont plant was the worst-performing plant in the GM system, and its poor performance reflected long-standing conflict between management and labor. The GM managers designed plant operations to reflect their belief that their employees were, in the words of one plant worker, "no-mind idiots" who were in it only for a pay­check. Employees had no control over their jobs, were told nothing about how their work fit into the broader production process of the car, worked as isolated cogs doing the same job day after day, and were given nothing but financial incentives for performance. The GM managers got exactly the kind of mindless employees they expected. Absenteeism was rampant, beer bottles littered the parking lot, drugs and sex were available on the factory floor, and the cars had more defects than those produced at any other GM plant. In 1982, GM gave up on their workers and shut down the plant.

Not long after, GM began a partnership with Toyota called NUMMI (New United Motor Manufacturing, Inc.) in an attempt to learn the "Toyota way." Toyota reopened the Fremont plant and hired back more than 90 percent of its former workers. In contrast to their GM predecessors, the Toyota managers designed plant operations to reflect their belief that employees had fully human minds - that they not only wanted to make a good salary but also wanted to take pride in their work, would embrace opportunities to learn and improve, and were smart enough to give useful input about plant operations. Workers were educated on the entire production assembly system, were given the power to improve that system and reduce defects by stopping the line if necessary (using the now famous "Andon cord"), and were put in teams that worked together as a single unit, among other changes.

The turnaround was incredible. In just one year, the plant went from having the most defects in the GM system to having nearly perfect ratings. Estimates were that it would take roughly 50 percent more manpower at a typical GM plant in Fremont, California, to produce the same number of cars as NUMMI. The worst plant had become arguably the best, using nearly all of the very same employees. What was the secret? According to industry analyst Maryann Keller, it was "no secret at all, and it was as old as history: Treat both white- and blue-collar workers with respect, encourage them to think independently, allow them to make decisions, and make them feel connected to an important effort. That is, treat employees like mindful human beings who care about doing a good job instead of like mindless idiots who care only about making money.

Reprinted with permission from 'Mindwise: How We Understand What Others Think, Believe, Feel, and Want.' Copyright Nicholas Epley, 2014. All rights reserved

MINDWISE: HOW WE UNDERSTAND WHAT OTHERS THINK, BELIEVE, FEEL, AND WANT
Author: Nicholas Epley
Publisher: Penguin Books
Price: £16.99
Price: 97818146144332

Don't try to decode your employees: Nicholas Epley

  The most accurate way to understand the mind of your employees is to ask them what they were doing when they felt the happiest in their job, Nicholas Epley tells Ankita Rai

In the book you write smart leaders understand what motivates their employees. Please explain how can leaders decode what their employees really want?

Leaders make quick inferences about what their employees want almost as easily as they take a breath. These inferences are guided by egocentrism (assuming others want what I want), by stereotypes (assuming others want what members of their group are presumed to want), and by inferences from their observed behaviour (assuming others want what seem to work hard for in their jobs). The problem is that each of these sources give some insight into the mind of another person but they also create predictable errors. There's variance in what makes people happy in their jobs, and so egocentrism and stereotyping is oversimplifying. This can be misleading.

People don't always work hard for things that really make them happy, and you can't always tell how a person really feels by watching what they do. The most accurate way to understand the mind of another person is not to "decode" them but ask them. If you want to know what your employees really want, ask them what they were doing when they felt the happiest in their job. Ask them what part of their day brings the most satisfaction for them and see if you can get them doing more of this. Also ask them what part of their day brings the least satisfaction, and see if you can get them doing less of this. Recognising the limits of your own intuition compels you to seek a more humble solution.

How can employers understand the intrinsic and extrinsic factors that motivate employees?

In the early 2000, the US military was losing excellent junior officers before serving a full military career. The generals believed that they were losing officers because they could not pay enough money. However, a survey of 242 officers revealed that for 73 per cent of the officers compensation was the least important reason for leaving. Only 3 per cent said it was the most important reason. Instead, the officers reported that their job was not intrinsically motivating enough.

The tendency to overestimate the importance of extrinsic motivator like money and to underestimate the importance of intrinsic motivators like doing something meaningful or worthwhile seems to be a rather reliable bias among employers. The bigger challenge in many of today's organisations is still assuming that people work mainly, if not almost exclusively, just for the money. Money matters a lot, of course, but it is far from the only thing that matters.

Nicholas Epley
John T Keller Professor of Behavioral Science, University of Chicago, Booth School of Business