Profit-Sharing in Government

Motivate your employees by giving them a stake in your success. Just don't try to do it with money.
by | February 1, 2008

Last month I wrote an apparently controversial column called "Greed is Good." (Thanks for all the "fan mail.") In it, I tried to make the point that government does exist to make a profit; it's just not measured in dollars. Profit is the outcome or result measure for the private sector. To say in government that we are not here to achieve a profit is akin to saying we are not here to achieve results. Try opening with that one at your next appropriations hearing.

For government, profit is measured in far more important things like quality of life, a clean environment, healthy kids and a vibrant economy. The point of my previous column was that we should be as focused on delivering these results to taxpayers as the private sector is on delivering profits to investors. Once we recognize we are here to achieve a "profit," we'll be better able to communicate our value to investors, develop innovative alternatives to achieve more profit -- and finally, share our profits with employees.

How could we make profit-sharing work in government?

Let me start with how not to do it. The typical way we have interpreted profit-sharing in government is to give monetary rewards to employees. Borrowing ideas from the private sector, we have tried numerous ways to incentivize employees with money -- a merit increase, a pay-for-performance-scheme, a "keep part of the savings" incentive, rewards for offering ideas. These programs have had limited success for a couple of key reasons. First, they are expensive and rarely survive a budget crisis. Second, they are built on some pretty strong assumptions: Namely, that you can motivate people, and that you can motivate them with money.

By now we should all be familiar with the work of Frederick Herzberg, who in his seminal 1968 article "One More Time, How Do You Motivate Employees?" stated quite clearly that you can't motivate employees. You can move them (that is, get them to do what you want them to do through positive or negative reinforcements). But that is quite different from motivation. The most powerful energy source is the one inside each person. True motivation is about tapping into that intrinsic energy.

Is pay a great motivator? No. It's a tremendously strong extrinsic mover, but only once. Then you have to do it again and again at exponentially higher amounts for it to have the same effect. Today's reward is tomorrow's expectation. Think about yourself. If I doubled your pay tomorrow, would you work harder? Better? Have you just been goofing around waiting for the right carrot before you would give it your all? Money is not a true motivator. (Unfair pay can be a lethal demotivator. But tapping in to a person's intrinsic motivation takes something other than money.)

So what does motivate employees?

For years, I have had the chance to validate Herzberg's research in my workshops. I always ask my participants, "What would make you excited or passionate about your work?" The answer is never "higher pay" or "an easier workload." The No. 1 answer is always, "Feeling like I make a difference." Simply put, government employees -- from every level and from every type of agency -- consistently say that the most important thing to them is the feeling that they are making a difference.

In my career I've often been able to accompany government employees on "ride-arounds," to better understand what they do. These have been some of the most rewarding times I've spent in government. Employees' faces light up when they recount stories of the impact they have had on people's lives. There was the ride-around with the child protective worker as we cruised through a neighborhood. She pointed out various houses where there had been issues and talked about what a tremendous impact her agency had in reducing chronic child neglect. There was the ride-around with the environmental workers as they pointed to an area that previously was an ecological disaster but was now thriving, thanks to their partnership with industry to find new solutions. I've been with economic developers who have shown me community revitalizations, and anti-poverty workers with pictures of families back on their feet plastered all over their cubicles.

People often joke that we don't work in government to get rich. I couldn't disagree more. We do work in government to get rich. Again, it's not measured in dollars, but rather in the richness that comes from helping people, helping communities, protecting a child or protecting our freedom. This is our "profit."

As managers of government agencies, we have the moral obligation to share that profit with our employees. In essence, we must ensure that each employee has the chance to feel the difference she is making. Everyone -- from district managers and file clerks to administrative staff and field workers -- should have the opportunity to touch and see your agency's impact. They should get a chance to meet the people who have been helped, see the neighborhood thriving, hear from the families whose loved ones were safeguarded.

So this year, I am begging you to put away your pay-for-performance plan and "dollars for ideas" incentive, and adopt a new profit-sharing program -- even if it's just once a year (maybe as a "Christmas bonus"?). It costs less and lasts a whole lot longer than a half-step pay increase.

Private-sector companies engage in "profit-sharing" to give employees a stake in the success of the business and motivate everyone around a common goal. Our "profit-sharing" can do the same things, but so much more. In the private sector, profit-sharing is limited to cash or stocks. While cash may make a great reward, it's a terrible gift (did you give your spouse or significant other cash for Valentine's Day?). We have the opportunity in the public sector, by ensuring our people can see and feel the impact of their work, to give our employees a gift -- something they will remember.

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