This NYT article talks about how the aggressive culture at Zynga may pressure employees to leave. In short, the article suggests that employees of Zynga are unhappy because of:

• Long work hours
• Quantitatively-driven progress reports
• Aggressive deadlines

However, many companies (not just Zynga) are aggressive, with long work hours and tight deadlines. In fact, I would argue that all large game companies have long work hours and tight deadlines. Why should Zynga be different?

At the end of the day, employee retention is a manifestation of employee motivation. To retain employees, you can have employees who are self-motivated or employees who are driven by extrinsic rewards. Extrinsic rewards (carrot/stick) only produce short-term benefits. Continuously use the stick and you will beat your employees to death; continuously use the rewards and you will have to increase the size of the rewards for it to be gratifying- and if another company offers a better reward, employees will leave. Neither of these scenarios are optimal for a corporation. In fact, extrinsic rewards are only sustainable from a corporate perspective if you are able to keep “refreshing” your employee pool. That is why we see in sectors that involve high-pressure and high pay (such as brokerage) people burn out quickly. That may be okay in sectors that do not require much creativity and/or collaboration, but not with companies that rely on content.

This is what Zynga is currently doing- by providing perks to the top players and letting its lower-performing employees go- it is relying on extrinsic rewards (and punishment) to rule its organization. This may work for the short-term but not for the long-term, and creates a hierarchy within the organization that may not be optimal for a company that needs to make creative content. [Of course, Zynga’s current content is not exactly creative in the sense that the content is novel. In fact, most of its big hits have been “remaking” games that have already proven to be somewhat successful. There’s nothing wrong with that. However, it is creative in the sense that remaking is a creative act in and of itself and designing a game requires more than one person.]

What does Zynga need to do to improve its management? Based on self-determination theory, the following three factors are essential for people to be self-motivated:

• Autonomy: You need to give people space so that they can make their own decisions
• Competence: You need to make people feel like they are good at what they’re doing
• Relatedness: You need to let people have an emotional attachment to their work and people related to work

If you read through the NYT article, you will realize that Zynga is not hitting any of these three factors. Okay, maybe it is hitting competence (for high-performance employees) but not for low-performance employees. That’s 0.5 out of 3.

The ironic thing is that these factors are the same factors that can make people motivated to play games. Let’s think about how this applies to one of Zynga’s games, Farmville:

• Autonomy: People spend hours customizing their farm because they are given the freedom to be creative. However, people are turned off by the pushy social features that require you to spam friends.
• Competence: The game is extremely easy to play and gives you all kinds of rewards (coins, achievement points, etc.) that makes you feel like you are good at the game
• Relatedness: The game allows you to play with friends, even allowing for social interactions with people you would otherwise not communicate with. Also, as you customize your farm, it becomes more personalized, letting you build an attachment with your customized virtual space.

These three factors support why people are motivated (or not) to play Farmville. From a self-deterministic perspective, Zynga’s hitting it pretty well on competence and relatedness factors, and partially on the autonomy factor. Let’s say that’s 2.5 out of 3. No wonder Farmville was so successful.

Zynga needs to tone down its quantitative evaluations of its employees. That works well with top performers, but not for the other 3/4 (or more) of its employees, and the instability of the majority low(er) performers will make the company less attractive overtime and lower the psychological well-being of its employees, which will lower self-motivation. Also, hiring and firing is so costly- both in terms of human and tangible resources.

The company also needs to focus on building a “qualitative” rapport among employees so that they build a connection with each other, with the product, and with the organization. The feeling of relatedness, or the social aspects of an organization is far more sustainable than immediate gratification or punishment. At one of my previous workplaces, the main reason employees stayed despite the tyranny of senior management and low income, was because we truly enjoyed each other’s company. So if Mark Pincus is a jerk, let him be one, but only if he is able to have his employees bond with each other- at the very least, they will have a common enemy to bring themselves together. The current structure at Zynga, however, doesn’t seem to allow for much bonding.

If Pincus is not thinking of sustainability, if he is trying to get the company value up as much as he can before selling it, then the current structure may not be so bad. But from an investor’s perspective, I don’t think I would want to put up money for a bubble company. Zynga’s resources are its people, if it wants to stick around, it has to understand that people have emotions and that treating them like robots is not going optimize its production line.

[Disclaimer: I personally know nothing of the corporate culture at Zynga; these opinions are based on the assumption that the facts in the NYT article are true]