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Rethinking the Profit Motive

by Scott Gast on 26th June 2010

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Why do we work? Here’s one answer: money. Since an agricultural surplus has allowed us to trade subsistence farming for the specialization of labor, most of us rely on currency as a means of obtaining food, clothing, shelter and other essentials. Thus, shuffling out of bed in the morning and showing up at an office — exchanging our time and labor for pay — is a major part of many of our lives.

But that’s too simplistic. Money, it turns out, is just one answer to the question, “Why do we work?” Beyond a salary, jobs can provide meaning and purpose in people’s lives, social connections, status and identity — even simply a place to go and organize the day. Dan Pink, a bestselling writer who has done some deep thinking on this topic distills it down to this: We are profit maximizers, but we are also purpose maximizers. And he goes further: In this (well-done) video, he calls into question the management axiom that if you reward something, you get more of the results you want — and if you punish something you get less. But using incentives in the wrong way, he explains, can actually backfire.

He points to a study from MIT that found that straight-up incentive schemes work well for discrete mechanical tasks, but not nearly so well for tasks involving “rudimentary cognitive skill.” The study suggests, too, that monetary-type rewards for anything above the mechanical — anything involving cognitive skill — can even be counterproductive: Some of the participants actually performed worse even with a larger incentive. So, Pink says, for simple “if this, then that” tasks, “carrots and sticks are outstanding. But when a task gets more complicated, when it requires some conceptual, creative thinking — those kinds of motivators [financial incentives] demonstrably don’t work.”

You might pull two key facts from all this:

  1. Money does motivate people — and without the right amount people won’t be motivated.
  2. Money is not a great motivator past a certain point. After that point, people want meaning.

Here’s the take-away, in Pink’s words: “The best use of money as a motivator is to pay people enough to take the issue of money off the table.”

And, he contends, this actually works in the real world. On his company’s philosophy, the founder of Skype says, “Our goal is to be disruptive, but in the cause of making the world a better place.” And Apple’s Steve Jobs: “I want to put a ding in the universe.” You could name a long list of others, too, like Seventh Generation, Patagonia, TerraCycle and many small, local businesses (even without any specific reference to sustainability) I’ve interacted with over the years.

Some of the best evidence is connected to the web. The open source movement (Linux, Apache, Wikipedia, etc) is a stellar example of people working and sharing their work because, for them, it’s a) fun and b) meaningful. It’s not always financially lucrative. And then there’s Google’s famous 20 Percent policy, which allows their employees to dedicate one day of their week to projects of their choice. I benefited from that policy once myself, when a Google employee lent his expertise to a project I was working on that engaged his creativity, mastery, and sense of mission. Have a look, too, at Google’s “Top 10 Reasons to Work for Google” (The first one is “Lend a Helping Hand.”):

Some of this might be chalked up to public relations spin. But the point is that we really aren’t profit-seeking automatons, mentally converting working hours into pay checks as some economists would have us believe. As Pink explains, if profit-chasing was the only goal, we wouldn’t spend time walking in parks or playing musical instruments or doing anything that didn’t eventually translate into a buck. And of course not — human beings are far more complex than that.

Good News for a Post Growth Economy

When discussing alternatives to economic growth, there’s one statement that can seem to be a showstopper: “People and organizations are motivated by profit. Expecting otherwise is naïve.” That charge has haunted environmentalists in particular since the 1970’s, when bombarding the public with images of oil-slicked cranes and tousled polar bears was a primary method of drumming up support. But given a choice between saving a polar bear and reporting another quarter of company growth, most of us would fire up the PowerPoint, say the critics.

It’s no surprise that this thing called “The Profit Motive” — the supposedly singular goal of business — has been a stumbling block for anyone attempting to deal with economic activity’s negative effects on the wider world. (“If people just cared more…” is the oft-heard refrain.) What Pink puts his finger on, and the MIT study and life experience suggests, is that The Profit Motive doesn’t stand alone. There’s The Purpose Motive, too. “More and more organizations want to have some kind of transcendent purpose,” he says. “Partly because it makes coming to work better, partly because that’s the way to get better talent…The organizations that are flourishing are animated by this principle.”

To loop all of this back to post growth economics: What if the best companies — the companies that wind up putting their competition out of business — are heavily purpose-driven? Could those companies manage to pay their employees enough to “take the issue of money off the table,” and make up the rest through meaning, purpose and positive impact? What if those kinds of companies made up the core of the economy? Could such an economy reach a steady state?

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avatar Scott walks, bikes, reads, and lives in rural western Massachusetts. His day jobs have included stints at YES! Magazine, the City of Chicago's Waste to Profit Network, and The Nature Conservancy. He is a graduate of the Environmental Science program at Allegheny College, and Special Projects Assistant at Orion Magazine.

Scott has written 17 posts on Post Growth Institute. Contact Scott

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