In a previous post, I outlined how a failure to find the right balance between intrinsic and extrinsic motivations can lead to a crowding-out effect in which the introduction of more extrinsic incentives results in poorer, rather than better, performance. With the right balance, however, extrinsic motivations can significantly enhance performance — the crowding-in effect.
Crowding-in and crowding-out effects can have a real impact on how decisions are made, on the effectiveness of policy, and on the performance of organizations, including co-operatives. Here are a couple of examples. Continue reading →
The following question was recently posed to us regarding governance models for second-tier co-operative organizations such as federated wholesalers and financial centrals: Is there an expectation that board members must think about the interests of the second-tier organization or should they represent their home organization?
This question nicely encapsulates what Glen Tully, chair of the Centre’s Management Advisory Board, calls the Two-Hat Problem. When board members have two hats they can wear, which one should they put on? Continue reading →
In a recent post on future options for the credit union system in Canada, Dionne Pohler and I argued that to be effective and meet the needs of a wide variety of stakeholders, the new system must rely on a mix of both extrinsic and intrinsic incentives. What are these two types of incentives? And why are they important?
Extrinsic motivations are monetary rewards or penalties such as pay-for-performance schemes and financial payments for not complying with rules and regulations. Extrinsic incentives work, it is believed, because people make decisions based on the financial costs and benefits of the options they face.
Intrinsic motivations, in contrast, can be observed in the desire to undertake activities simply because they are enjoyable or because they generate satisfaction — the wish to do a job well or to undertake a task because it leads to some greater good. The mission motivation that drives the behaviour of many people is a good example of an intrinsic incentive. Continue reading →
Like many countries, Canada is looking for green-energy alternatives in response to climate change. Germany presents an interesting case study that Canada could use. The “Energy Transformation” (Energiewende) in Germany has increased renewable energy to more than 30 percent of consumption to date and aims for 60 percent by 2050. The country has accomplished this thanks to innovative legislation coupled with the response of civil society and the business sector. A key mechanism was the creation of nearly nine hundred energy co-operatives in less than a decade.
Brett Fairbairn outlined the strategy in his lecture titled “Citizen Energy: Social Innovation, Public Policy, and the German Energy Transformation.” In partnership with Markus Hanisch from the Berlin Institute of Co-operative Studies, Brett examined the role of community-level social entrepreneurship and innovation in achieving green-energy targets. Continue reading →
The question posed above is the entirely appropriate title of an October 2016 report by Central 1 on possible futures for the centrals in the Canadian credit union system (read the report here). As the report indicates, low margins, increasing competition, rapid technological change, increasingly diverse expectations for member services, and new and often unfavourable regulatory environments make it clear that the status quo is unsustainable and change is required at the second-tier level. Continue reading →