Imagine you are the British governor of Delhi. Your citizens are dying at an alarming rate from cobra bites. What’s your solution?
Background
This very event took place during the British Colonial rule in India. Their solution? A bounty offered to citizens for successfully hunting cobras. Instead of eradicating the problem, however, people turned to farming cobras to illicitly collect bounties. When the government caught on to this, they stopped the bounty program. Naturally, people released their now-useless cobras. The cobra population in India became greater than ever; today, there are an estimated 50,000 snakebite deaths in India every year. German economist Horst Siebert coined this phenomenon as the “Cobra Effect.”
How this applies:
These unintended and often unforeseen consequences are caused by the “most fundamental [way] we grasp the world”: linear thinking. This cause and effect mindset, however, is uncharacteristic of the business world where many things are, in fact, non-linear. In business, there are numerous incentive structures. It can sometimes be difficult to catch incentives that will fail.Specifically, corporations that hire employees from different countries should consider non-linear motivational incentives for their employees. When it comes to how multinational firms should approach incentive structures for an international workforce, it is important to consider the cultural background of the employees.
Advantages of an International Workforce
There are a number of reasons for corporations to look outside of the United States to expand their businesses. International employees offer language and cultural knowledge, creativity and perspective, and rich workplace diversity. Millennials are particularly interested in working at companies with high diversity and rich culture. In fact, companies with higher-than-average diversity had 19% higher innovation revenues. Nowadays, companies are becoming increasingly globalized. However, the incentive structures that may work for one culture cannot be mirrored in the next.
Incentives at Play
Incentive plans in the workplace are important and have “the potential to raise morale and increase job satisfaction,” which “can decrease turnover and save money with recruiting,” amongst a number of other benefits. The most common incentive structure is greater pay in exchange for a higher monetary return, otherwise known as “pay-for-performance.” However, taking Wells Fargo as an example, their employees took this incentive to the extreme by setting up “unauthorized accounts for customers to meet their sales targets.” This linear incentive proved detrimental to Wells Fargo’s customer relations. This problem of linear incentives becomes magnified when presented with a dynamic workforce.
Herzberg and Maslow
There are numerous factors in the workplace that contribute to employee performance. One study concerning cross-cultural employee motivation in international companies finds that there are three influencing factors for designing dynamic motivation systems in an international workforce. First, the significance of working for cross-cultural employees varies across different cultural philosophies towards work. For example, while Thai employees enjoy a bit more play during their workday, Chinese, German, and American employees do not. Secondly, Maslow’s hierarchy of needs for cross-cultural employees varies in different regions. In comparison to Western ideals, the needs of the society are valued in Oriental cultures over the needs of the individual. Managers must also consider Herzberg’s internal and external aspects. Internal factors cause dissatisfaction among employees, and external factors increase employee satisfaction. All three mechanisms are shaped by managerial decisions.
Motivating a Global Workforce
For an international firm’s long-term growth, it is beneficial to think nonlinearly about increasing workplace performance. Zhao and Pan’s study concluded that managers of international companies should observe motivating factors for their cross-cultural workforce, then design motivational incentives based on their findings. This dynamic, nonlinear thinking is the key to promoting innovation among transnational firms.
Lily Monroe is a sophomore in Wharton concentrating in Legal Studies and Business Ethics and minoring in Fine Arts and Hispanic Studies. On campus, she is involved with the Penn Undergraduate Law Review and is a brother of the Alpha Kappa Psi Business Fraternity. In her free time, she likes to unlock new Smash Brothers characters and try new food trucks.