Return on Investment Theory
of Human Motivation
Return on Investment
All animals, from amoebas to humans,
always choose the option that maximizes their return on investment (ROI).
ROI is calculated by dividing return by investment.
There are two ways to maximize ROI:
maximize return or minimize investment.
Return is different for different people.
Also, the time value of return is different between people, e.g.,
some people may value a larger return later over a smaller return sooner or vice versa.
Examples of Returns
In addition to the obvious, i.e., money, there are several returns that an employee seeks in a job, some of which are:
- Guaranteed money now (e.g., salary)
- Possibility of more money later (e.g., bonus, stock options, own business)
- Fulfilling a purpose, pursuing an agenda
- Achieving a challenge
- Improving skills
- Attention, Recognition, Respect
- Genuine praise, where genuine is determined by the recipient
- Helping others
- Teaching others
- Leading others
Examples of Investments
In addition to the obvious, i.e., time, there are several investments that an employee puts into a job, some of which are:
- Time not spent doing other things
- Time away from family
- Dealing with frustration
- Dealing with disrespect
- Risk of personal failure
- Risk of company failure
- Too much travel
- Money spent on self-education
Dividing Return by Investment
According to this theory, each animal, especially people, already possesses the ability to divide, or at least compare, each return by each investment.
In the terminology of mathematics,
each person divides the value of each return by the value of each investment,
where the value of an abstract concept is mapped to a more concrete number according to the value system of that person.
John may value the risk of company failure less than and
the possibility of more money later greater than Bill.
John would tend to prefer stock options over guaranteed money now,
while Bill would prefer a stable salary now.
Closely coupled with ROI is control:
People control what they can control (i.e., investment) in order to get what they want (i.e., return).
If a person has no control of an input into a process,
he disregards that process and focuses on what he can control.
A generic example is an employee controlling his hours at work and his effort at work in order to get a raise (higher return / higher investment),
or to not get fired (same return / less investment),
both of which maximize ROI.
A more specific example is a salesman focusing on accounts that have a high probability of success or a high commission rate.
How a company associates its goals and its revenue with an individual employee's controls and wants is vital to the success of a motivational program.
Further, please note that this association may be very different with different employees, even in the same department.
The notion that fairness means that we must do the same for everyone is not valid.
The motivational agreement between company and employee must be individualized,
written and in the possession of the employee.
Yes, an individualized, written motivational plan for each employee does indeed take more time for the management team.
How important are your employees, anyway?
Respect, Trust, Credibility, Belief, Action
in order for an employee to believe that the motivational program will work for him and to commit to do the extra work,
the management team must be credible.
In order for the management team to be credible,
the employee must trust the management team.
To build the trust of the employee, the management team must take the initiative and make the overt and noticeable effort to respect the employee.
Working forward, respect builds trust.
Trust builds credibility.
Credibility builds belief.
Belief builds action.
How does a management team measure how much trust and credibility that they have engendered into their employees?
Ask them to work overtime with no pay, and watch their eyes.
Implementation of ROI Theory
See Management By Desire.
Page last updated Sunday, March 2, 2008