One of the most universal symbols of motivation, except maybe the carrot, is cash. The cartoon character with enormous dollar signs for eyes is an image we all know. Scrooge McDuck aside, the reality is that while money may be a fine motivator for mechanical tasks, studies prove that it’s not for many of the tasks that contribute to successful lives. Creative and cognitive skills are not motivated by reward. In fact, monetary reward can actually impede performance for these types of tasks.
Dan Pink, a well-regarded career analyst and best-selling author, spoke about this very subject at TEDGlobal in Oxford. Focusing on the disconnect between science and business, Pink makes the case that because ‘the destination’ is not necessarily clear in the 21st century, society needs more ‘Results Only Work Environments’ (ROWE) rather than financial incentives: “Rewards work really well for those sorts of tasks where there’s a simple set of rules and a clear destination to get to. Rewards by their very nature narrow our focus and concentrate the mind.” In ROWE, employees are not held to a strict schedule or even required to attend certain meetings, but are expected to accomplish their job nonetheless. According to Pink, this work model has yielded positive results and ultimately fosters more engaged employees with lower turnover. In this type of environment ‘autonomy, mastery and purpose’ are the values of business’ problem-solving future.
Now, I ask you to apply this employee-work-ROWE theory to an inheritor of personal wealth. I can’t think of a better description for the trust fund baby stereotype than Pink’s picture of someone who lacks ‘autonomy, mastery, and purpose’ … someone whose performance is actually poorer, despite financial backing, than the counterpart who relies on intrinsic drive to pay the bills.
So, how can a one prevent this from happening to their progeny? One proposed solution is Jon and Eileen Gallo’s Financial Skills Trust, which aims to create an environment similar to Pink’s ROWE. In theory, I love this idea and how it incorporates financial skill benchmarks. Still, I would like to have more anecdotal evidence about the implementation of such a trust. From the perspectives of the trustee and beneficiary, there is still one (big) unanswered question: How can you avoid the incentivizing nature of trusts at their core?
If the goal of the generation passing on wealth is for an intrinsically motivated next generation, then the parents, grandparents, aunts, uncles and family advisors are all responsible for actively modeling and communicating this objective. The financial responsibility program of the Laird Norton family is a great example of how to make this work – annual family summits that mix business with pleasure. They usually take place at locale nice resort and give family members an opportunity to meet with and learn from the boards that govern their foundations, their core wealth advisors, and from each other.
If you are now thinking about starting such a family tradition, please know that you might feel a little worried that the communication taking place won’t be ‘right’ at your first retreat. If this happens to be the case, I hope you will remember to not let perfect be the enemy of good. As someone who has witnessed and partaken in these multi-generational conversations, it is not always textbook. But it does … it really, really does contribute to the engagement, creativity and motivation of the next generation.