The most interesting question, in my opinion, that was asked of me and Peter Zeugheuser at last Thursday’s CCM audio conference on Origination Credit and Partner Compensation for the New Legal Landscape was not really within the purview of the topic. It was "does compensation really work as an incentive?"
The topic–for a broadly diverse audience–was an overview of law firm partner compensation systems and the forces that are shaping changes in those systems. Of course the assumption underlying all law firm compensation systems, and the concomitant imperative to align compensation with firm goals, is that they do work in achieving at least some part of our objectives.
But the truth is that the answer to that critical question is not at all clear cut–and the research that has been done could and probably should disrupt many of our settled ideas about partner pay.
By happenstance,on Friday, October 1, the day after the audio conference, I had the good fortune to participate in a conversation with Daniel Pink. Pink is the author of the book Drive: The Surprising Truth About What Motivates Us, in which he summarizes decades of research that business has essentially ignored: extrinsic rewards (i.e. compensation) are not the best motivators of productivity and profitability. Pink is an engaging speaker on the subject, as this video demonstrates (he along with my college Psych professor Barry Schwartz was named one of TED’s Ten Best Speakers ) and has a particular perspective about the practice of law. Although he is a Yale Law School graduate– "something I regret" –"to his lasting joy, he has never practiced law," as his website says.
Pink’s position is that while carrots and sticks worked successfully in the twentieth century, that’s precisely the wrong way to motivate people for today’s challenges. In Drive, he identifies three "true motivators"—autonomy (the ability to control your work), mastery (of skills or subject matters), and purpose (which gives a personal meaning to your work). In support of his premises, he gives a number of examples of solid research in which those motivators soundly trounced financial rewards, even in such objectively hard results as sales and profits.
Pink’s conclusions rest on a line of research starting in the 40s with Maslow’s "Theory of Human Motivation," which posited a "hierarchy of needs," in which, after a minimal amount of compensation, other benefits like appreciation, mastery, meaning, etc., were more motivating. In that vein, David Maister did an interesting study of 139 law firms a number of years ago looking at what most aligned with profit, and found that attitudes held throughout the firm were more predictive of profit than compensation policies.
With demonstrated high levels of pessimism and need for autonomy and also low resilience and sociability (among other attributes), coupled with the expectations of the workplace, lawyers are a particularly challenging, and perhaps even unique, group to motivate.
In response to my question about his take on the world of lawyers, Pink said that he had spoken to a number of law firms and that good motivators weren’t in place at most firms–young attorneys are given very little autonomy to direct their work or careers, they are kept in a hierarchical ladder that doesn’t recognize individual mastery and they find little personal meaning or purpose in what they do. In fact, Pink has devoted several pages of Drive (pp 98-101) to law firms as the poster boys of outdated industrial-age thinking.
Pink’s views have to be taken in the context of an earlier book, A Whole New Mind, in which he contended that the era of “left brain” dominance, and the Information Age that it engendered, is giving way to a new world in which “right brain” qualities–inventiveness, empathy and meaning–predominate. According to Pink, the future belongs not to the analytical types–lawyers. accountants and computer programmers are the examples he mentions–but to "a very different kind of person with a very different kind of mind." In other words, the analytical skills are susceptible to being out-sourced. In a fast-moving, inter-related world, innovation, empathically identifying with others’ experiences and providing purpose can’t be.
Pink’s emphasis in looking at motivation, therefore, is to find what will bring those critical 21st Century skills to the fore.
But if extrinsic rewards are not that motivating, how is it that we lawyers are obsessed with PPP and compensation? Given how many lawyers game their comp systems to make the last nickel or change firms for an extra dime, it’s hard to see how money isn’t a motivator, right? One explanation for this behavior is that in a one-metric world, highly competitive lawyers are going to reach for the top of that metric, whatever it is.
But compensation doesn’t have to be the only metric and it is by all knowledgeable lights not the motivational tool of choice. Our experience is that firms who are concerned about their lawyers being dissatisfied about the level of compensation usually find that in fact the fiercest dissatisfaction comes not with regard to financial rewards but other aspects of the work experience—communication, respect, recognition, investment in training, etc. In nearly every case, lawyers will trade compensation for non-financial benefits–better support for their career objectives, a seat at the governing table or more control of their working lives.
These three factors are certainly not the final words in the discussion about motivation and compensation. We will be looking at positive psychology’s contribution to the field and some startling results achieved simply by raising the mood in the work force (something many law firms could benefit from). There are also some amazing insights that have been achieved into the best function of rewards, whether we are better off rewarding efforts or results, which I will elaborate on in a later post.
But according to Pink, if we could start from scratch to build a system that motivates the highest performance, we would make sure we offer our lawyers the opportunity for more automous, individually purposeful work that provides them with a sense of mastery.