Use Zero-Base Budgeting to Build a Culture of Cost Management

Zero-Base Budgeting

Traditional Incremental Budgeting

As part of the traditional budgeting process, managers tend to roll their budget over from one year to the next. In addition to accounting for any strategic initiatives or headcount changes, they simply add to every line-item in the previous year’s budget a certain percentage “and then some” to account for cost inflation. They assume that the ‘baseline’ is automatically approved, so they justify just the variances versus prior years.

The drawback of this budgeting process is that nobody questions the underlying ‘baseline’ costs. Further, these cost increases are carried from year to year.

Zero-Base Budgeting

'Zero-base Budgeting' by Peter A Pyhrr (ISBN 047170234X) In the 1970s, Peter Pyhrr, a Texas Instruments accountant, formally developed zero-base budgeting. In his influential Harvard Business Review article and a book titled Zero-base Budgeting, Pyhrr advocated that a prior year’s budget should not be used as a benchmark for the next year’s budgeted costs.

With zero-base budgeting, managers prepare a fresh budget every year without reference to the past. Consequently, they start every line-item in the budget from a zero-base even if the amount didn’t increase from the previous year. They are thus forced to justify all claims on their organization’s financial resources as if they were entirely new claims for entirely new projects.

Advantages and Disadvantages of Zero-Base Budgeting

Zero-base budgeting advocates say that it detects inflated budgets and unearths cost savings by focusing on priorities rather than simply relying on the precedent. Managers secure a tighter focus on operations by justifying each line-item in their budgets, thereby reducing the money they allocate to the lowest level possible. Managers can also contrast competing claims on their ever-scarce financial resources and therefore shift funds to more impactful projects.

Zero-base budgeting critics call attention to the many practical difficulties of implementing this time-consuming tool. More importantly, since zero-base involves give-and-take, the budgeting process is susceptible to favoritism, cronyism, and political influence.

3G Capital’s Success with Zero-Base Budgeting

'The 3G Way: An introduction to the management style of the trio' by Francisco S. Homem de Mello (ISBN B00MKKWZME) Zero-base budgeting has garnered much attention in the last few years as the centerpiece of an aggressive cost-cutting recipe used by 3G Capital, a thriving Brazilian buyout firm that’s renowned for its parsimonious operations. 3G’s predominant investment strategy is to acquire and then squeeze value out of companies, particularly in the food and restaurant industries.

At Anheuser-Busch, InBev, Tim Hortons, Burger King, Heinz, Kraft, and other acquired companies, 3G’s hard-nosed managers have used zero-base budgeting to initiate sweeping cost cuts. They’ve shut down factories, laid off thousands of factory workers, eliminated hundreds of management jobs, sold off corporate jets, forced executives to fly coach, restricted employees’ office supplies to $15 a month, and even asked employees to seek permission to take color printouts.

'Dream Big' by Cristiane Correa (ISBN 8543100836) Inspired by 3G, many other companies have adapted zero-base budgeting to root out bloat. Some have even gotten carried away—for example, Pilgrim’s Pride (an American meat-processing company) used zero-base budgeting to measure how much soap employees use to wash their hands and how much Gatorade hourly employees consume during breaks.

Idea for Impact: Zero-Base Budgeting Is an Effective Cost-Management Tool

Cutting operating costs is an ever-bigger priority at many organizations. For each line-item in your budget, ask “Should this be done at all?” and “Is this the most efficient and effective use of our resources?”

Consider zero-base budgeting to rigorously find cost-effective ways to improve your operations. It can bring about cost discipline, force your operations to become lean, and ultimately boost your bottom line.

Suggested Reading

How to Promote Employees

How to Promote Employees

Job Promotions Can Be Stressful

A job promotion is generally cause for celebration and gratification. However, it can be a source of deep anxiety for many employees: they tend to suffer additional mental strain and are less likely to find time to go to the doctor. Research at the University of Warwick found that “the mental health of managers typically deteriorates after a job promotion, and in a way that goes beyond merely a short-term change.”

Promote Employees Who’ve Shown Some Evidence of Success

Before you decide to promote an employee, ask yourself the following six questions about the candidate. The more affirmative answers to these questions, the better the chances for the promotion to succeed. Examine and resolve any “no” answers before considering the employee for other job transitions.

  • Is the candidate performing her current duties well enough to justify a promotion?
  • Can she hand over her current responsibilities to a new person?
  • Does she possess a sound understanding of the fundamentals of a business and have the requisite operating experience?
  • Is she keen to take on a new job? Is she familiar with the responsibilities and priorities of the new job? Is she willing to make decisions and be accountable for results?
  • Is she qualified and experienced enough to do at least part of the new job? Is she adequately trained or ready to be trained in the new job’s requirements?
  • Are her interpersonal skills adequate to work with employees, customers, suppliers, peers, and bosses in the new job?

Idea for Impact: If employees are not entirely prepared for new assignments, you are unintentionally setting them up for stressful transitions, bitterness, or eventual failure. Beware of the perils of promoting people too quickly.

Self-Assessment Quiz: Are You A Difficult Boss?

Self-Assessment Quiz: Are You A Difficult Boss?

If you answered “yes” to any of the following questions, you need to reflect on and adjust your management style.

  • Do you give employees more critical feedback than appreciation, compliments, and positive feedback?
  • Do you undercut praise with criticism? In other words, do you deliver criticism with praise in the form of a “feedback sandwich,” undermine the positive impact of praise, and weaken the significance of the corrective feedback?
  • Do you give unfeasible or contradictory orders? For example, do you fail to give employees enough resources, time, and direction to get a job done?
  • Do you play favorites?
  • Do you reward “yes” people?
  • Do you avoid taking responsibility for your mistakes?
  • Do you focus on assigning blame and finding fault instead of fixing a problem?
  • Do you set deadlines and forget to follow up?
  • Do you micromanage too often?
  • Do you regularly coach your employees?
  • Do you invent busy work?
  • Do you stand up for your employees?
  • Are you sometimes self-absorbed and manipulative? Are you sometimes cold or abrupt?
  • Do you fail to give productive people encouragement, autonomy, and latitude?
  • Do you expect that there’s only one way to do a job, and that’s your way?
  • Do you raise your voice unnecessarily?
  • Do your employees avoid eye contact or dread meeting with you?
  • Do you act as if your team or organization would fall apart if you were to go on a vacation for a week? Do you expect regular updates from your team even while you’re on vacation?
  • Do you withhold information from your staff because it takes too much time to fill them in?
  • Do you ignore workplace concerns (inappropriate dressing, for example) until they evolve into problems? In other words, do you let concerns fester and let problematic situations get worse?

When Should a Leader Pass Blame?

When Should a Leader Pass Blame? A leader is the “captain of the ship.” He is responsible for his organization’s every outcome—good or bad. He is wholly accountable for everything that happens under his authority.

If there is a problem caused by his mistakes or errors within his organization, a leader should not shirk responsibility. He should not abandon his team if things go wrong, nor should he pass the blame or use an employee as a scapegoat.

However, a leader cannot see and touch all his people, especially if his organization is large. He cannot be personally responsible for a rogue employee who steals information, misuses funds, or engages in unethical behavior. In such circumstances, the leader may pass blame.

Although a leader cannot police every action taken by every employee, the leader should be held accountable for not instituting and overseeing a rigorous control system to prevent problems, deter unethical actions, and to identify employees that engage in such behavior.

A leader also sets the tone for all his employees—not only in terms of goals and priorities but also in terms of proper organizational behavior. A legendary case in point are the ethical rules that investor Warren Buffett set in his company after the 1991 bond-rigging scandal at Salomon Brothers: “I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper, to be read by their spouses, children, and friends, with the reporting done by an informed and critical reporter. If they follow this test, they need not fear my other message to them: Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.” Even now, Buffett includes this statement in his biannual letters to his managers and displays a video of this speech at every Berkshire Hathaway annual meeting.

A Majority of Formal Training Doesn’t Stick

The Majority of Formal Training Doesn't Stick Most formal corporate training programs fail because (1) they’re not extensive enough to indoctrinate a new behavior and (2) they tend to dwell more on “doing” and less on ingraining a prescribed thought process.

Corporate training programs work best if there is an immediate need for employees to use certain techniques and tools. If more than a few days pass between training and the application, employees may not recall what they’ve learned. Therefore, training programs are most effective when they are about need-to-know-now topics and relate to employees’ current problems.

When employees try repeatedly to apply a new skill and fail, they can get dispirited and revert to their old patterns of behavior.

As I mentioned in my previous article, formal training can be very effective with a good deal of follow-through reinforcement under the watchful eyes of a diligent coach, such as a Process Sherpa.

Idea for Impact: Employees will not use a skill consistently until it’s ingrained in their work habits.

Don’t Reward A While Hoping for B

Effective Award Systems

We do what we are rewarded for doing. We are strongly motivated by the desire to maximize the positive consequences of our actions and minimize the negative consequences. Academics identify these aspects of behavioral psychology using the monikers “expectancy theory” and “operant conditioning.”

Flawed Reward Systems

Reward systems ought to commend positive behavior and punish negative behavior. But many organizations tend to reward one type of behavior when they really call or hope for another type of behavior. For instance,

  • A manager who wants his sales force to create long-term customer relationships mustn’t reward salespeople for new business from new customers, but for retaining customers and expanding sales to them.
  • A project manager focused on work quality shouldn’t reward a team for completing a project on time.
  • At institutions of higher learning, especially at prestigious universities, a professor’s primary responsibilities ought to be teaching and advising students. However, the academic rewards systems assert that the primary ways to achieve promotion and tenure are through successful research and publishing. Hence, given the constraints of time, a professor is likely to dedicate more time to research at the expense of quality teaching. Alas, mediocre teaching isn’t censured.
  • As I described in my article on “The Duplicity of Corporate Diversity Initiatives,” managers who extol the virtues of “valuing differences” stifle individuality and actively mold their employees to conform to the workplace’s existing culture and comply with the existing ways of doing things. Compliant, acquiescent employees who look the part are promoted over exceptional, questioning employees who bring truly different perspectives to the table.

“On the folly of rewarding A, while hoping for B”

In 1975, Prof. Steven Kerr wrote a famous article titled, “On the folly of rewarding A, while hoping for B” that’s become a management classic. Over the decades, this article has been widely admired for its relevance and insight. The article (the 1975 original is here and the 1995 update is here) provides many excellent examples of situations where the reward structure subtly (or sometimes blatantly) undermines the goal. The abstract reads,

Whether dealing with monkeys, rats, or human beings, it is hardly controversial to state that most organisms seek information concerning what activities are rewarded, and then seek to do (or at least pretend to do) those things, often to the virtual exclusion of activities not rewarded. The extent to which this occurs of course will depend on the perceived attractiveness of the rewards offered, but neither operant nor expectancy theorists would quarrel with the essence of this notion.

Nevertheless, numerous examples exist of reward systems that are fouled up in that the types of behavior rewarded are those which the rewarder is trying to discourage, while the behavior desired is not being rewarded at all.

Idea for Impact: “Put Your Money Where Your Mouth Is”

Aligning Reward Systems If you see behavior in your organization that doesn’t seem right or doesn’t make sense, ask what the underlying reward system is encouraging. Chances are that the offending behavior makes sense to the individual doing it because of inefficiencies in your reward system.

Take stock of your reward systems. Effective systems should induce employees to pursue organizational goals by appealing to employees’ conviction (or intrinsic motivations) that they will personally benefit by doing so. To inspire employees, translate levers of extrinsic motivation at your disposal to intrinsic motivation as I elaborated in my previous article.

Idea for Impact: Make sure that you understand and clearly communicate expectations, and reward what you really want your employees to achieve. Don’t encourage a particular behavior while promoting an undesirable one through your rewards and praises.

Ten Rules of Management Success from Sam Walton

Sam Walton (1918–1992,) the iconic founder of Walmart and Sam’s Club, was arguably the most successful entrepreneur of his generation. He was passionate about retailing, loved his work, and built and ran Walmart with boundless energy.

'Sam Walton: Made In America' by Sam Walton (ISBN 0553562835) “Made in America” is Walton’s very educational, insightful, and stimulating autobiography. It’s teeming with Walton’s relentless search for better ideas, learning from competitors, managing costs and prices to gain competitive advantage, asking incessant questions of day-to-day operations, listening to employees at all levels of Walmart, and inventing creative ways to foster an idea-driven culture. “Made in America” is also filled with anecdotes from Walton’s associates and family members—in fact, some of their opinions are less than flattering.

Former CEO of General Electric Jack Welch once said, “Walton understood people the way Thomas Edison understood innovation and Henry Ford, production. He brought out the very best in his employees, gave his very best to his customers, and taught something of value to everyone he touched.”

Here are ten insightful management ideas from “Made in America” with the relevant anecdotes from Walton or his associates.

  1. When hiring employees, look for passion and desire to grow. Having the right skills and qualifications is no doubt essential in a potential employee, but a better predictor of long-term success and career advancement is his/her passion for learning new things, commitment to a task, and a drive to get things done. A former Walmart executive recalls, “Sam would take people with hardly any retail experience, give them six months with us, and if he thought they showed any real potential to merchandise a store and manage people, he’d give them a chance. He’d make them an assistant manager. They were the ones who would go around and open all the new stores and they would be next in line to manage their own store. In my opinion, most of them weren’t anywhere near ready to run stores, but Sam proved me wrong there. He finally convinced me. If you take someone who lacks the experience and the know-how but has the real desire and the willingness to work his tail off to get the job done, he’ll make up for what he lacks.”
  2. Delegate and follow up. Delegation is indispensable; yet it remains one of the most underutilized and underdeveloped managerial skills. One element of effective delegation is consistent follow-up. Far too often, managers will delegate a task and then fail to follow up to see how things are going. Such failure to follow-up is tantamount to abdication of accountability for results, which still lies with the manager. Former Walmart CEO David Glass recalls, “As famous as Sam is for being a great motivator … he is equally good at checking on the people he has motivated. You might call his style: management by looking over your shoulder.”

Management Ideas from Sam Walton

  1. Persist and rally people to the cause. Passionate managers demonstrate the energy and drive needed to rally their teams around a shared vision. They engage their employees with the same messages over and over, escalate their sense of urgency, and get their vision implemented quickly. Former Walmart CEO David Glass recalls, “When Sam feels a certain way, he is relentless. He will just wear you out. He will bring up an idea, we’ll all discuss it and then decide maybe that it’s not something we should be doing right now—or ever. Fine. Case closed. But as long as he is convinced that it is the right thing, it just keeps coming up—week after week after week—until finally everybody capitulates and says, well, it’s easier to do it than to keep fighting this fight. I guess it could be called management by wearing you down.”
  2. Mentor, critique, and inspire employees. Mentoring employees is an effective way to improve employee performance and build trust and loyalty. Effective mentoring is not merely telling employees what to do. It is helping them broaden and deepen their thinking by clarifying their goals and asking the right questions. Effective mentoring is also about supporting employees as they learn and practice new skills and habits. Walton writes, “I’ve been asked if I was a hands-on manager or an arm’s-length type. I think really I’m more of a manager by walking and flying around, and in the process I stick my fingers into everything I can to see how it’s coming along. I’ve let our executives make their decisions—and their mistakes—but I’ve critiqued and advised them.”
  3. Invest in frontline employees for better customer relationships. Much of customers’ opinions about a business come from the myriad interactions they have with customer-interfacing frontline employees, who are the face of any business. If a business doesn’t get these customer experiences right, nothing else matters. Walton writes, “The way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising. Satisfied, loyal, repeat customers … are loyal to us because our associates treat them better than salespeople in other stores do. So, in the whole Wal-Mart scheme of things, the most important contact ever made is between the associate in the store and the customer.”
  4. Treat employees like business partners and empower them by sharing information. Effective managers foster open communication by treating employees as co-owners of the business and sharing operational data regularly. Managers empower employees by helping them understand how their contribution makes a difference, discussing opportunities and challenges, and encouraging them to contribute to solutions. Walton writes, “Our very unusual willingness to share most of the numbers of our business with all the associates … It’s the only way they can possibly do their jobs to the best of their abilities—to know what’s going on in their business. … Sharing information and responsibility is a key to any partnership. It makes people feel responsible and involved …. In our individual stores, we show them their store’s profits, their store’s purchases, their store’s sales, and their store’s markdowns.
  5. Never be satisfied. There’s always room for improvement. Effective managers never rest on their laurels and are persistently dissatisfied with the status quo. They possess a pervasive obsession for discovering problems and improving products, services, and people. Home Depot founder Bernard Marcus recalls, “If you ask Sam how’s business, he’s never satisfied. He says, ‘Bernie, things are really lousy. Our lines are too long at the cash registers. Our people aren’t being helpful enough. I don’t know what we’re gonna do to get them motivated.’ Then you ask some of these CEOs from other retail organizations who you know are on the verge of going out of business, and they brag and tell you how great everything is. Really putting on airs. Not Sam. He is down to earth and knows who he is.”

Insightful Management Ideas from Sam Walton

  1. Appreciate employees and give honest feedback. A key determinant of employee engagement is whether employees feel their managers genuinely care. Do the managers provide regular, direct feedback, both appreciative and corrective? Do they coach employees in their learning and career growth? Walton writes, “Keeping so many people motivated to do the best job possible involves … appreciation. All of us like praise. So what we try to practice in our company is to look for things to praise. … We want to let our folks know when they are doing something outstanding, and let them know they are important to us. You can’t praise something that’s not done well. You can’t be insincere. You have to follow up on things that aren’t done well. There is no substitute for being honest with someone and letting them know they didn’t do a good job. All of us profit from being corrected—if we’re corrected in a positive way.”
  2. Listening to employee’s complaints and concerns could be a positive force for change. Effective managers provide their employees the opportunity to not only contribute their ideas, but also air concerns and complaints. By fostering an environment of open communication, managers who handle employee opinions effectively not only boost employee motivation, performance, and morale, but also benefit from learning directly about problems with teams, organizations, and businesses. Walton writes, “Executives who hold themselves aloof from their associates, who won’t listen to their associates when they have a problem, can never be true partners with them. … Folks who stand on their feet all day stocking shelves or pushing carts of merchandise out of the back room get exhausted and frustrated too, and occasionally they dwell on problems that they just can’t let go of until they’ve shared it with somebody who they feel is in a position to find a solution. … We have really tried to maintain an open-door policy at Wal-Mart. … If the associate happens to be right, it’s important to overrule their manager, or whoever they’re having the problem … . The associates would know pretty soon that it was just something we paid lip service to, but didn’t really believe.”
  3. Learn from the competition. Effective managers understand that keeping tabs on competitors, copying their innovations as much as possible, and reaching out to customers the way competitors do is a great strategy for growing business. Sam Walton’s brother Bud recalls, “There may not be anything (Walton) enjoys more than going into a competitor’s store trying to learn something from it.” A former K-Mart board member recalls, “(Walton) had adopted almost all of the original Kmart ideas. I always had great admiration for the way he implemented—and later enlarged those ideas. Much later on, when I was retired still a K-Mart board member, I tried to advise (K-Mart) management of just what a serious threat I thought he was. But it wasn’t until recently that they took him seriously.”

How to Make Wise People Decisions

How to Make Wise People Decisions

Here are eight basic management principles for making wise people decisions:

  1. Pay attention to your people decisions. These are the decisions that determine your team/organization’s performance. Hiring and coaching employees is a manager’s most important task.
  2. For any assignment, pick people who’ve shown at least some evidence of the ability to do it well. Don’t expect them to be productive in their new role within days or weeks.
  3. Do not give new people major assignments. First, put them into positions where expectations are known and help is available. Help them make the transition.
  4. Set the right expectations. A manager can forestall a great deal of employee problems by proactively setting expectations.
  5. Don’t ignore concerns until they morph into problems. Conflict can be emotionally distressing, but being decisive and doing what’s best eventually works out well for everyone.
  6. If an employee is doing poorly, first attempt remediation and coaching. If those don’t solve his/her underperformance, it’s usually prudent to cut your losses. Giving the employee more time to improve not only wastes time and energy, but increases the mutual hostility and chances of a claim of wrongful termination.
  7. Take responsibility for mistakes. Don’t blame the person you hire or promote for not performing. Your decision put them there.
  8. Take your managerial duties seriously. It’s your obligation to make sure that responsible people in your organization perform. In turn, they have a right to expect you to be a competent manager.

Effective Goals Can Challenge, Motivate, and Energize

One of my blog readers asked me to write more about goal-setting and performance against goals. In response, I studied the work of University of Maryland’s Edwin Locke and University of Toronto’s Gary Latham, two renowned researchers on goal-setting. Here is a summary.

Effective Goals Can Challenge, Motivate, and Energize

Goals Impact Performance in Several Ways

  • Goals can help direct: A person’s goals should direct his/her attention, effort, and action toward goal-relevant actions at the expense of less-relevant actions.
  • Goals can help motivate: A person’s goals can motivate him/her to pursue specific outcomes. The person can be motivated only when his/her goals are sufficiently challenging and can nudge him/her to put in special efforts.
  • Goals can help persist: A person is likely to persist at his/her efforts when his/her goal is worthy enough to attain.
  • Goals can trigger learning: Goals can either activate a person’s knowledge and skills that are relevant to performance or induce the person to acquire such knowledge or skills.

Best Practices for Goal-Setting and Performance

  • Specific, difficult, but attainable goals lead to better performance than easy, vague, or abstract goals such as the general-purpose exhortation to “do your best.” Hard goals motivate because they require a person to achieve more in order to be content with his/her own performance.
  • 'Goals' by Brian Tracy (ISBN 1605094110) Goal specificity and performance share a positive, linear relationship. When a person’s goals are specific, they direct and energize his/her behavior far more effectively than when they are vague and unspecific.
  • Performance is directly proportional to the difficulty of a goal as long as a person is committed to the goal, has the requisite ability and resources to achieve the goal, and does not have conflicting goals.
  • Taking on excess work without access to the necessary resources to realize the goals (“overload”) can moderate the effects of goals.
  • A team performs best when the goals of the individuals on the team are compatible with the team’s goal. Therefore, when an individual’s goals are incompatible with his team’s, his/her contribution to the team will be subpar.
  • The goal need not be in focal awareness all the time. Once a goal is accepted and understood, it resides in the periphery of the person’s consciousness and serves to guide and give meaning to his/her actions.
  • While long-term goals are relevant and helpful, most people find short-term goals more effective because they channel a person’s immediate and direct efforts and provide quick feedback. This suggests that it’s best to divide long-term goals into concrete short-term objectives.
  • 'Living in Your Top 1%' by Alissa Finerman (ISBN 1453619232) Self-efficacy plays a key role in the achievement of goals. A person is much more likely to buy into and pursue goals if he/she believes himself/herself to be competent enough to reach those goals. The most effective goals must therefore embrace a person’s strengths—such goals help him/her strive towards success by leveraging the best of who he/she is and what he/she can do.
  • One reason a person may lack self-efficacy is his/her past failures with undertaking similar goals. Such a person may believe that he/she may never reach his/her goals and should first undertake a series of small, near-term goals instead of difficult, distant goals. The person’s success with a series of smaller goals can boost his/her confidence and can inspire him/her to undertake larger goals. For example, a chain-smoker will find the goal of smoking cessation daunting. He should therefore focus on smaller goals like gradually cutting down the number of cigarettes he smokes every day. Experiences of goal achievement can build up momentum to tackle the larger goal.
  • Goals are not effective by themselves. Feedback is the most important moderator of goal-setting because it tracks the progress of performance towards goals and creates new sub-goals. If a person finds his/her progress towards a goal unsatisfactory, the feedback he/she receives can drive corrective efforts to develop new skills or pursue the goal in a new way.

If You Want to Create Positive Change, Instill Pride

Eliciting top performance in employees is the essence of management.

And one of the most effective ways to motivate employees is to instill a sense of pride.

If You Want to Create Positive Change, Instill Pride Very often, managers try to command and control by instilling a sense of shame or fear: managers use these emotions when they are either unwilling or unable to persuade employees to meet expectations. Sure, shame and fear get results, but they do so at a cost: employees not only behave irrationally when they’re afraid or put to shame, but also become stressed, lose self-confidence, and grow resentful towards the manager and the organization.

The best way to motivate positive change is to invoke pride; try, “Jeremy, I am disappointed with your performance [on this task]. Given how well you did [an excellent job] on [a previous assignment], I know you can do a lot better than this.” This technique conjures up in the employee a sense of pride about a great previous performance and invokes a sense of guilt about failing to excel as before.

Pride is the most prominent element of intrinsic motivation that can be levered effectively to instill change. Remember that extrinsic motivation is in itself pointless; people will change only if intrinsically motivated.

Idea for Impact: Whether you’re managing or parenting, if you want to penalize, instill shame or fear; if you want to create positive change, instill pride.