The Commitment Problem - Part 2

If your employees are not committed - to your company, to your cause, to you - there's certainly a chance they'll embezzle millions as described so eloquently in The Commitment Problem. But it's more likely that, when employees are not committed, they'll just toe the line and give you exactly what's required of them, but no more. They won't go beyond the line, they won't offer extra effort to make the company great, they'll grumble when you ask anything extra of them.

Every moment of the work day, employees have the choice of giving to the company or taking for themselves, of thinking about the long-term or of living in the moment and thinking about what's-in-it-for-me. If your employees tend to choose the long-term more often than the short-term, things are probably pretty good. If they tend to choose what's-in-it-for-me more often than not, you're probably feeling the frustration.

When exploring the personnel policies of several companies that suffered from low commitment, it was interesting to see areas where the companies demonstrated the same lack of commitment towards their employees. A few example:

• The minimum vacation allowance in Saskatchewan, by law, is three weeks per year for up to nine years of service, four weeks a year for ten or more years of service. One company never considered allowing anyone more than the legal limit of vacation, no sabbatical options, no leave-of-absence options, no flex for an extended holiday. Not very committed to long-term work-life balance.
• In Saskatchewan, you're not required to pay people who are off sick from work. One company had a policy that said, if you're visibly or audibly sick, don't come to work, but they also wouldn't pay for sick leave. A bit of an impossible choice for employees. Not very committed to the financial well-being or health of their workers.
• Another company had very rigorous time-tracking methods, requiring employees to account for every 10 minutes of their day and allowing no overtime unless pre-approved. In plain words, they would pay for exactly the legal work day, but not a penny more. Yet, the owners were repeatedly surprised when employees would resist attending a company function in the evening or on the weekend - "on their own time". Not very committed to the ideas of mutual generosity, of helping each other, of give and take.

So, if you find that your employees do not seem very committed to your company. Take a deep look at whether your company is really committed to your employees, and make sure you look at it from their point of view, not yours.

Enough With the Standing Ovations!

At an investment company's recent Client Appreciation Night at TCU Place in Saskatoon, the entertainment was good, but not great.

The warm up act was Jimmie Walker, who played Kid Dynomite (J.J. Evans) on the seventies comedy show Good Times. For some reason, Jimmie kept mentioning Moose Jaw as Saskatoon's main rival (it's Regina), went on for a while about the imminent post office strike (it's a teachers' strike, dude), talked about the lousy economy (while Saskatchewan has been booming). A little out of touch with the local scene! There were a few chuckles and smatterings of applause, but noone seemed to really get into it.

The main act was Michael Winslow, the cool sound-effects guy from the Police Academy movies. He made some pretty remarkable noises with just his mouth and a few effects pedals (the Jimi Hendrix solo was great), but also spent a whole lot of time on lowbrow "man walking out of theatre footsteps" and "man taking a leak" bits. Again, a few chuckles, a few impressive moments, but mostly mediocre filler.

Yet, at the end, the crowd of a couple thousand feet was up on it's feet for a standing ovation! Why? Why is it, that no matter how average the event, we feel obligated to honor the performers with what used to be reserved for only the best? Why pretend it was excellent when it wasn't? Don't we value excellence anymore? Have we lost our ability to identify excellence?Are we trying to be so darned nice that we never criticize mediocrity?

I've been noticing this in the world of business awards lately. Now some award recipients are truly deserving, and I mean no disrespect to those individuals and companies who are honored for their accomplishments over the years. Just staying in business for 25 years is actually a pretty amazing accomplishment.

I'm more concerned with all of the awards competitions that are mostly about "Ain't We Great". Three companies apply, or are nominated, and one gets the award as the "best this or that" in the city, or the province, or even the ENTIRE COUNTRY! One Saskatoon technology company proudly displayed an Excellence in Quality Management Award in their lobby, yet the company was a chaotic mess, with inconsistent products, huge turnover and terrible morale. They looked good on paper, and had a great award application, so with this public award as the supporting evidence, management was vocal and proud of their track record.


Not all management approaches are equal, either, nor are they all excellent. Bullying isn't good management. Winging it isn't good management. Loudership is not good leadership. And chaos is not really a business strategy.

So, don't give an ovation unless the show was truly excellent. And don't pretend that your management team is excellent, if it ain't.

Swimming Upstream

Do you ever despair about the effort it takes to make changes in your organization? To get results? Whether you're an economic development agency trying to attract businesses to your city, or a business owner trying to motivate your staff, do you sometimes get the feeling that there is some greater force that's trying to prevent your success? Are you swimming as hard as you can, but not getting anywhere?

We all work within systems, and our systems are part of larger systems. While our focus is usually on what we ourselves are responsible for on a daily basis, sometimes we need to expand our attention to the larger systems of which we are a part. Two examples...

In Northern Ontario, economic development agencies have struggled to attract and keep major industrial customers that are heavy users of electricity. The energy policy of Ontario sets electricity rates higher than neighbouring Quebec and other jurisdictions, so major industries like Cliffs Natural Resources ferro-chrome refinery are finding it hard to justify locating in Ontario. Even though other technical reasons might make Ontario an ideal location, the larger system of provincial energy policy makes it unattractive because of the electrical costs. So, while particular communities might have excellent economic development initiatives, they're swimming upstream against the province's power rate policies.

Similarly, the owners of an otherwise vibrant 25-person Saskatchewan company have been continually frustrated by employees who won't give that little bit extra to get jobs out on time. Their company, their payroll policies and their management approach operate within the larger system of Saskatchewan's labour standards where any work beyond eight hours per day is overtime, to be paid at time-and-a-half.

Applying this diligently, the company has required all overtime, no matter how small, to be approved in advance. The hassles of getting management micro-approvals for every little extra effort has evolved into a culture of clock watching, with everyone leaving when the official day is done. The managers are trying to foster teamwork and cooperation, but their staff have been swimming upstream against this inflexible administration of overtime, agains inflexible administration of Saskatchewan's labour standards.

When local economic development agencies identify provincial policies that affect their ability to attract companies, they need to work with that larger system to address those issues - in Ontario, the hydro energy policies. In the Saskatchewan example, when the small company's strict application of the eight-hour work day damages their entrepreneurial culture, they need to give some attention to the larger system of Sasktchewan's labour standards. They need to identify alternatives, either informally adding flexibility to the work day, or formally applying for a permit to average hours. They need to work on the larger system that's making it all but impossible for employees to willingly give that little bit extra.

In any case, recognize that all of your work takes place within some larger systems, and those systems can have large effects on your results. If you find yourself swimming as hard as you can and not getting anywhere, look outside your day-to-day operations to the larger system that you're working within. It's easier to make progress if you're not trying to swim against  a strong current.

Five Bucks per Goal

Do you use incentive programs to get people motivated? Do you use rewards as the path to excellence? Have you ever had unintended consequences from your reward systems?

A kids hockey team had enjoyed some early success in the season, but it was largely due to the heroic efforts by a few of the better players. As the season progressed, the individual heroics were not enough, and the team started losing repeatedly to other teams that were becoming more cohesive, more organized, more cooperative.

So, in practice, the coaches worked on passing drills, on positional play, on group tactics. In practices, the team became very effective, with good understanding of their roles, and really effective team tactics. In practice, the team worked well together. But in games, they completely fell apart.

In games, the players reverted to their heroic ways; trying to stick-handle the puck from one end of the ice to the other, taking wide angle shots with no chance of success, and generally playing desperate, selfish, ineffective hockey. The team was getting demoralized. They continued to lose. What was going on?

It turns out that the main problem was the kids' parents. In their desire to help their kids succeed, many of the parents had offered their kids cash rewards for scoring goals - one kid would get five bucks from his dad for every goal he personally scored. Don't get me started on how distorted this is (whatever happened to playing a game just because you love it and want to have fun playing hard with your friends!?), but think of how damaging this "reward" system was to the team, and the kids.

In game situations, most of the kids were thinking only about themselves, about how they, personally, could score a goal. Not how the team could do well, or how the team could score, but how "I" could score. Because of this selfish thinking, the team was not playing as a team, they were losing out to teams that were, and they were on a long, painful downhill slide. The kids were stressed, the parents were stressed and on their cases, and the kids had to choose between two opposites - either play as a team and be effective, or play selfishly to try to please their parents and get the cash rewards. It ended up that this strategy wasn't making them much money anyway, since they weren't scoring very many goals against teams with better collaboration.

Rewards hurt. They damage internal motivation, and replace it with a dangling carrot. That in itself is reason enough to be cautious. But rewards inevitably produce unintended consequences, distortions and distractions from what you'd really like to have happen. Why not work on developing the love of the game, on the joy of working together to face challenges, on the intrinsic pleasures of a job well done, of becoming excellent. The research shows that this approach produces more success anyways. So next time, keep your five bucks in your pocket, and enjoy watching your kids' team play hockey. And, in business, keep your dangling performance incentives in your pocket (slightly disturbing image?), and work instead on helping the team enjoy their work, pull together, and win - together.

Human Resources Discussion Group

Dave Hunchak of Swift Fox will be facilitating an interactive discussion group for SATA (Saskatchewan Advanced Technology Association) called HRX - Human Resources Exchange. In a relaxed, confidential environment, participants will share issues and challenges and learn about current industry practices around one of the most important components of a business – people.
The 2010-2011 program runs the 2nd Tuesday of each month, from 4:30 – 5:30 pm at Ideas Inc., 207-120 Sonnenschein Way, Saskatoon. Registration is free for members of SATA.

• Tuesday Dec 7, 2010
• “Compliance is not an option”
• HR Basic Rules - Labor Standards, OH&S
• Tuesday Jan 11, 2011
• “To set policy or not to set policy, that is the question”
• HR Policies
• Tuesday Feb 8, 2011
• “Lead, follow or get out of the way?”
• Leadership Style and Practice
• Tuesday Mar 8, 2011
• “Finding them, getting them, keeping them”
• Talent Management
• Tuesday Apr 12, 2011
• “Cooperation vs. competition - what works when
• Productivity
• Tuesday May 10, 2011
• “More than just a paycheck”
• Compensation
• Tuesday Jun 14, 2011
• “Wrap-up and Review”
• And topics for next year…

For more information contact Laurel Reich, SATA Program Director at lreich@sata.ca or phone (306) 244-3889.

I've Only Ever Worked for Idiots!

After a couple of beers, an articulate and well-educated teacher, with years of experience, great relationship skills, and a reliably positive attitude, lamented that, throughout his career, he had "only ever worked for idiots!" As examples he gave:

• One administrator awarded managers a 14% pay increase, then, citing poor economic conditions, was shocked when the teachers' union balked at a 4% raise for them.
• Another bureacrat required weekly reports that took up to three hours a week to prepare, when the teachers already didn't have enough time to prepare for their classroom lectures.
• Another manager allocated half a million dollars a year for research stipends, and then created such a large administration staff for the program that less than $25,000 / year was ever available for research.
• At another job, the boss would request that skilled and professional workers wash the manager's shoes when they got muddy in the construction around the facility, because "his time was too valuable."

These kind of power-abusing experiences are shockingly common. These kind of experiences seriously compromise morale and create a toxic environment that damages the effectiveness of even the most positive of employees.

So much of our Human Resources effort seems to be focused on fixing problem employees. This isn't surprising when you realize that management hires HR people to help with the people issues, and HR reports to management. But maybe the focus on employees is a little misguided, a little too much on symptom bandaids and not enough on root cause analysis. Perhaps the Human Resources Department needs to set itself apart a little, and direct a little more energy at finding and fixing managers whose behaviours are destroying the morale of the company's precious human resources.

Misguided Incentive

At hockey practice, the kids lined up at center ice for a shoot-out, where each skater would in turn try to score on their goalie. This is a fun drill, especially for the goalies, who go head-to-head with each of their friends, their teammates. Shoot-outs are a matter of pride for goalie's; their reputation is on the line so they do everything they can to keep the puck out of the net. But, on this occasion, the coach decided to offer a prize of two dollars if the goalie could stop all the pucks on the first round of about twenty skaters. The rationale was "you have to give them incentive or they won't try."

The goalie was pretty excited - two bucks is two bucks - still a significant amount of money for a kid. But, when the fourth skater of twenty scored, this external "incentive" dissappeared, and the goalie visibly reduced his effort, even moving out of the way on some harder shots. The coach was miffed, and when he asked the goalie what he was doing, he said "why bother, I can't get the two dollars anymore."

So, by offering the perk, the bonus, the money incentive, the coach replaced the pure joy of stopping pucks with the calculated pursuit of two bucks. What the kid normally would do just because he loved it, he now stopped doing as soon as the external "incentive" was no longer attainable.

Managers, coaches, and leaders need to learn that internal incentive is the only true incentive. So set a fair wage, then take money out of the day-to-day picture, and let people enjoy their work.

Do You Treat Your People With Respect?

Do you treat your people with respect? I know you'll say "Yes" - everyone says "Yes". But do your actions really demonstrate respect? Would your people say "Yes" if asked the same question?

Without respect, both given and perceived, managing becomes infinitely more difficult.

Here are a dozen ways that managers disrespect their slobbering, unwashed, incompetent employees...(oops, did I say that out loud? make that thirteen ways)...

1. Do you hold people accountable for the results of the system? Deming said that 95% of results come from the system, yet we seem to direct 95% of our management efforts into fixing "bad" people.
2. Have improvements resulted in layoffs?
   Do you think anyone will help you make further improvements if their jobs, and their friends jobs, will be at risk?
3. Do you identify who causes each problem?
   Root cause analysis is not about finding culprits, it's about changing the system so problems can't recur.
4. Who designs the work?
   Engineers? Managers? Bosses? The people know how to do the work; the people know how to improve the work. Most of the details of the work are probably never known to those who don't actually do the work.
5. When asked a question do you typically respond with an answer?
   Decisions should be made as close to the work as possible. People need the information, the understanding, and the support to make their own decisions about their own work.

6. Do you use carrots and sticks?
   Performance management in all it's flavours implies "I'm OK, but you need to be motivated and controlled."
7. Do you “roll out” changes?
   When you assume that a success in one area can be rolled out to another area, it implies that people are interchangeable. They're not. They're all unique and every change must be adapted and adopted, not imposed.
8. Has there ever been a strike or a lockout? Have people had to work without a contract?
   Pretending that labour-management disputes somehow evaporate after the contract is signed is naive. Of course it damages trust, destroys respect.
9. Do you blame people for absenteism and sick leave?
   People miss work because they have to; they're trying to survive in the system.
10. Do you set targets and quotas?
    Systems have capacities. Imposing arbitrary targets with no idea how people will achieve them isn't management, it's wishing, it's abusive
11. Do you tell people that they're the problem?
    If you've ever put up a poster saying "Do it right the first time," your true thoughts are clear - people screw up because people aren't careful enough.
12. Do your people ever truly get to contribute to the improvement of their daily work?
    In most companies, only an elite few ever get to change the work. This is insane.

Respect is the core of Lean, of Continuous Improvement, of the Toyota Production System, of effective auditing, of teamwork, of communication. It's crucial. Yet so many of the things we managers do are deeply disrespectful. Belittling. Condescending. The damage is vast, as are the opportunities as you start to turn it around.

Nobly Ignoring the Incentive Program

A professional association had an incentive program to reward members for signing up new members. In order to get "credit" for the referral, an existing member would have to be specifically named on a new member's application.

Several energetic members took it upon themselves to create a series of interesting and informative events that drew many new members into the association. They worked as a team behind the scenes to create these events, so none ended up named on new applications, and none got credits for referrals. As a team effort, it would have been impossible to identify a specific, single member which should have gotten the credit for any one new application anyway.

The idea of the reward program was to create incentive, to create motivation. But for these people, the reward program actually served as a demotivator, a disincentive, a source of discontent and potential conflict. They saw that even though they did more than any others to help the association grow, others would be rewarded and they would not. They saw that, in order to succeed in their team effort, they could not seek to get their individual names on new members' applications; it would not be fair if one team member were rewarded and the others were not. So, in order to excel at the task, these people had to nobly set aside the incentive program. They had to consciously ignore it, actively work against it, in order to let cooperation grow within their team to create success.

Incentives damage internal motivation. Incentives damage teamwork. Incentives are a poor, desperate substitute for a truly inspiring, engaging vision.

Some Advice on Cubicles

"It will be best that cubicles for unfettered slaves be built to admit the midday sun at equinox; for those who are in chains there should be an underground prison, as wholesome as possible, receiving light through a number of narrow windows built so high from the ground that they cannot be reached with the hand."

This wise advice is from De Re Rustica of Columella, a practical 1st Century guide to Roman farm management. Interesting to note was the recommendation that slave's cubicles, even for those in chains, ought to have natural light. Many modern-day cubicle-dwelling employees are nowhere near a window.

Perhaps our management isn't as enlightened as we believe?

Slashing the Soda Pop Budget

At a large electronics development company, one of the branch offices was in the habit of providing free soda pop for the staff. The staff worked long hours with intense deadlines to complete one hardware design project after another. After a cost review, head office sent a directive to stop the free soda, deciding that the cost was unnecessary and was being abused by the staff.

I met with this company for other reasons three years after this had happened, and in discussion with staff about morale, management, the human resources department, and company policies, people were still very bitter about this unilaterally imposed decision.

The free soda had been a source of pride, a differentiator between this company and other employers in the area. Staff saw it as a nice thing that the company offered them, and it helped a little with accepting the long hours and intensity.

By taking it away, without discussion or consultation, the staff felt disappointed, disrespected and cynical. Heard over and over were variations of "I bust my butt for this comapny. I work long hours and they don't pay overtime. They're worried about the costs of a couple of sodas when I've been giving them my heart and soul!? Well, no more."

Management of the day had been happy with the short term cost savings and patted themselves on the back for their budget success. Needless to say, the losses due to damaged morale, that were still pervasive three years later, were much greater than the savings from stopping the free soda. The losses were unmeasurable though, and the soda savings were easily measured. So management used what they could measure, and made a very poor decision.

The Game of (Business) Life

In John Conway's Game of Life, a graphical simulation game, complex life-like behaviour emerges from a set of very simple rules. It's mesmerizing to watch simulations of these rules, and see the intricate patterns that spontaneously develop, ranging from reproduction and movement, to oscillation and infinite growth. Two travellers repeatedly move back and forth between barriers, while shooting off a steady stream of floaters whenever they collide. Sophisticated behaviours emerge and the graphical objects demonstrate different strategies for surviving within the system of rules. If you change the rules, those same strategies no longer work, and different strategies must emerge.

The same idea repeats in the Game of Business Life, in the way things happen within our organizations and communities:

1. We set up an environment with a bunch of rules.

2. We let people exist in this environment for a while.

3. Stable behaviours spontaneously develop that help people survive in this environment.

In Saskatoon, landfill rates have been increasing to reflect increasing costs. The idea is to pass the costs of running the landfill on to those who actually use it. Unfortunately, a different behaviour emerges as people seek ways to thrive in this system of rules. Instead of hauling things to the dump, a chronic problem has emerged as people dump appliances, chemicals, building materials and garbage in the ditches and sloughs surrounding the city.

This free dumping behaviour naturally emerges from higher landfill rates, but it's obviously not desirable. From one slough by our acreage, we've hauled out a mattress, a basketball net, a barbeque, car tires, bundled tree branches, shingles, lumber with nails sticking out, a dishwasher, and an organ. We recently had our dogs covered in sticky black tar that someone dumped in the water, requiring a trip to the vet to sedate them and clean the tar off their fur.

Similarly (except for the sedation part), service reps in a call center were rewarded based on how many calls they handled. The idea was to encourage employee eagerness to handle customer calls, to improve service. The actual behaviour that emerged was a dramatic shortening in average call time, as service reps routinely ended calls early and transfered them to someone else, allowing them to handle more calls but also resulting in much poorer service and unhappy customers. This emergent behaviour allowed them to maximize their income and avoid their manager's criticism and was a natural response to the environment.

As leaders, we create the environment, with rules and measurements and rewards. Our people adapt to this environment and adopt behaviours that are "natural" for the system of rules we've set up - behaviours that allow them to thrive and survive. Leaders then struggle to foster other, more-desirable behaviours, but since they're unnatural for the system, they require constant scrutiny and constant input of energy and effort to maintain.

Given an environment of pay, reward and reporting, people will adapt their behaviours to survive in that environment. How much easier it is when the environment fosters the behaviours that we actually want.

Why Don't Unions Ask for Better Management?

I'm always surprised that management and labour negotiations focus so narrow-mindedly on the countable things like wages, overtime, vacation, raises, retroactive pay, hours of work. So often, the real issues in an organization emerge from non-countable things. The real frustrations and pain for workers arise most often from management philosophy, management techniques, management direction (or lack of direction), from the measurement and reward systems themselves, and from the leadership's lack of understanding of the day-to-day work. Everyone would be better served if labour negotiators put management training on the negotiating table, and made "improved management" a higher priority. Shifting management thinking from the archaic Command and Control to the world-class Support, Engage and Facilitate has huge potential upside for the workers and the workplace, and even more upside for management and shareholders. Both sides are always fighting about the money. This seems trivial and counterproductive in light of the deeper, more impactful issues.

Disconnecting Pay from Performance - Are You Crazy?!

As parents of young kids, we whip them into a frenzy about Christmas by talking about toys, candy, Santa, presents, cake, Santa, toys, and more toys. Then, when our kids get rabidly excited about "toys, toys, toys!" we're shocked and appalled. We self-righteously blame the media for making Christmas so commercial without recognizing our role in creating these little monster-consumers. We also unknowingly do exactly the same thing in business management.

We want our employees to be engaged in the work, to contribute their energy and ideas, and to be internally motivated to provide excellent service and get satisfaction from a job well done. Then, we constantly distract them by making their pay conditional, by holding up bonus plans and trying to get them excited about incentive pay, about perks, about contests, about quotas, about bonuses! And, for some reason, we're then surprised and annoyed when our employees constantly think about whether they're getting paid enough for the work they do.

Disconnecting pay from performance IS a controversial topic, and I'm sure I won't do it justice, but let's take a look at it all the same.

"Every board in corporate America is an advocate of pay for performance," says Hewitt Associates.
"Pay-for-performance needs to be embedded in your culture," says Workscape Institute.

Pay-for-performance is almost universally assumed to be a good thing, especially among HR professionals and HR consultants. It's touted as an effective motivator, a solution for reducing costs, and a way to entice workers to greater achievements. You probably have, or have considered implementing, a pay-for-performance system in your organization. You probably believe that people will work harder, faster, and smarter when their rewards are based on their results.

Yet research on human motivation clearly shows that intrinsic motivation, the personal, internal drive to do a good job, is the best and only true motivator. Unlike mice and chickens and dogs, research with humans shows that extrinsic motivators (like cookies, gold stars, prizes, bonuses, perks, praise) actually damage our intrinsic motivation AND (here's the surprise...) produce inferior results. In the short term, we'll work for a perk, but in the medium and long term, we'll end up only working for perks, destroying our innate desire to do good work and master new skills.

Throughout the corporate world, and more commonly in government, health care and education, managers and HR departments rely extensively on extrinsic motivation systems like pay-for-performance in attempts to get people working. Yet the research actually points us in a different direction, towards disconnecting pay from performance. Scary stuff kids!

If you think about it, there are basically three ways to reward people for doing a task. (I'm talking here about conditional rewards, rewards that are only distributed if certain conditions are met. Of course, we still pay people for their work. What we're looking at is how and whether we should dangle additional carrots in front of them.)

The first approach is Winner Take All, common in business, where one or a few top performers get a reward, and the others get nothing. This is the Employee of the Month mentality, the inspiration for the vacation trips for Top Performers, the Bonus Programs for those at the top of the heap. Competition and desire for reward will supposedly motivate everyone to work harder and strive for the top spot.

The second method, even more common in business, is Proportional Distribution, where each person gets rewarded in proportion to their ranking, so the higher performers get more than the lower performers. This is the familiar Pay-for-Performance mentality, the Commission Sales approach, the Ranking of people, the Piece Work approach, the Performance Appraisal approach. The theory is that people will work harder and strive to do more and better quality work under these systems in order to earn more.

Third, is the Equal Distribution approach, rare in business, where groups are rewarded equally, or not at all. Elements of this are sometimes seen in Profit Sharing plans, or Team Reward, but this approach is most often dismissed without consideration. Ideas like this are labelled pie-in-the-sky, impractical, or as leftist / communist / socialist mumbo jumbo.

So, most managers are surprised to discover what research shows to be more effective. And I mean "more effective" from a hard-nosed, results-based, profit-oriented point of view. It turns out that Equal Distribution (all the same conditional rewards or no conditional rewards) outperforms both Pay-for-Performance AND Winner Take All systems, for most human activities. Pay is why people take jobs, but Pay is NOT an effective motivator when it comes to the details of the daily work. It turns out that if you want to get exceptional performance from people in their daily work, you are better served by disconnecting their pay from their actual performance, by decoupling the tasks from the rewards.

Alfie Kohn, author of Punished by Rewards, suggests a revised basic principle for compensation: "Pay people generously and equitably. Do your best to make sure they don't feel exploited. Then do everything in your power to help them put money out of their minds. The problem with financial incentives is not that people are offered too much money; earning a hefty salary is not incompatible with doing good work. Rather, the problem is that money is made too [prominent]. It is pushed into people's faces."

So, instead of contiually whipping our employees into a frenzy about pay issues, about rewards and bonuses and incentives, let's establish a fair pay structure and then set it aside. Let's allow our people to focus on their work, on their customers, on mastering tasks and processes, on pride of workmanship, on nurturing teamwork and relationships, on job satisfaction. Let's support them in improving the work, and stop with the dangling carrots.

It may seem crazy, but consider disconnecting pay from performance. It's a relatively simple systemic shift that can produce deep and far-reaching improvements in your organization.

They're Just Lazy

Some points of view just aren't that helpful. Recently, I've been hearing "They're just lazy" far too often, from parents about their kids, from managers about their staff, from over-worked employees about their coworkers. Other phrases that fit the same mold are "They don't care", "They're not trying" and "They don't have any common sense". The implication that's hidden in these comments is always some variation on "I'm OK but there's something wrong with them."

Interestingly enough, whenever I talk with "them", I don't get the impression of laziness or apathy. Usually, with the vast majority of workers I interview, I get the impression of people who care deeply about what they're doing, people who are trying hard to do a good job, and people who are doing their best to succeed in the circumstances. There's a big disconnect here - on one hand, employees who are trying hard, often to the limit of their capacity - on the other hand, managers who are seeing their people as lazy.

Once we've labelled people as lazy, and decided that they don't care, aren't trying or lack common sense, what can we DO about it? How can we get better results from them? The logical approach is to try to fix these perceived problems directly; to try to fix these people; to cure them of their laziness. So, we use cookies to entice people to work, we use golden handcuffs and velvet hammers to whip them into action, and we resort to training to adjust their attitudes and instill common sense. But, unfortunately, if people are already working hard, trying hard, and doing their best, all of these interventions will be ineffective as there's little room for improvement in those directions. And managers, seeing little improvement and feeling frustrated and powerless, will escalate their efforts to fix the people, causing further problems and perpetuating the cycle.

To become more effective at creating positive improvements, managers need to set aside this ineffective thinking. When we can shift our thinking, and honestly believe that our people DO care, DO have intelligence and sense, and DO want to do a good job, then we can become more powerful and effective. With the same amount of effort, we can now begin to produce better results. We start looking for deeper causes - causes built into the systems, policies, culture, tools, procedures that we as management have set up - we start looking for deeper opportunities for growth, and begin to see all of the barriers, limitations, and stresses that have been preventing our people from doing what we expect of them.

If you've lived through a major corporate transition, either from good work place to bad, or bad work place to good, you'll be able to relate to this. You'll know that an engaged, high-performance individual can magically become a lazy, cynical dropout if you put them in a toxic work environment. And you'll know that supposedly lazy, apathetic workers can become engaged, high-performers when you fix a broken work place over time.

If you want to be more effective as a manager, stop seeing your people as lazy, and start honestly looking for the structures and stressors in your workplace that are the real sources of your problems; those are the real sources of your opportunities as well.

Bonus Program Kills Cooperation

Jan worked in a large food sales organization. All the sales people had independent territories but were grouped within regions, and often shared ideas and suggestions with each other about what was working well. New management implemented a significant new bonus program, with a reward trip for the top performer and cash prizes for the most improved sales people in each region. Jan reported that she completely stopped sharing ideas with colleagues, since she wanted to win the bonus rewards. For two years, all cooperation amongst sales people in the region essentially stopped. A quick analysis showed that overall sales had not shown any real improvement.

We Treat Our People Like Family

Is there fear in your organization? Are your people scared to speak up, to be open, to volunteer information, to risk? Are your people off-balance, concerned about their performance, and scared that they might be replaced, or let go?

A phrase I heard from five different managers this week is "We treat our people like family", accompanied by lists of all the good things they do, like their companies' open door policies, fun work environment, 360 reviews, training programs, performance management process, benefits, bonuses and incentives. I can only think of one manager in my experience who readily, publicly admitted that he wanted his people to be constantly scared, to realize that unless they performed, they would be replaced. He was a mean man, who I believe enjoyed the fear in his underlings. He is the exception. Most of the leaders and managers I've worked with feel a little offended at any suggestion that their people might be scared - leaders want to be liked, managers want to believe that their people can speak freely and trust them.

In Out of the Crisis, W. Edwards Deming spoke repeatedly about the need to "drive out fear, so everyone can work effectively for the company." Ryan and Oestreich speak of building high-trust organizations instead of high-fear organizations in Driving Fear Out of the Workplace. And, though twice as long as it needed to be, Steven Covey's The Speed of Trust makes a compelling case for how trust, and lack of fear, contributes to the bottom-line.

Now all of the five managers I heard from this week are very nice, very accomplished people. They work hard to blend a clear vision with compassion and polite kindness. But still, from discussions with people in their organizations, it is clear that their employees feel fear. The fear isn't about whether the manager is nice or mean; it generally isn't a personal fear at all; it is fear that's built into the structure of their companies.

I don't know about your family, but mine seems very different from the way these companies are run. It doesn't seem to go over very well when I give my wife a performance review. She doesn't seem to appreciate it when I let her know how she compares to other women I see on TV. Similarly, when I make my kids compete for parental affection, and promise to withhold love from the one that gets the poorest marks in school, it doesn't seem to promote the free exchange of mutual support and encouragement that I'm hoping for.

We don't (or shouldn't) do this stuff in our families. We shouldn't do it at work.

At work, we rank our people and compare them to each other. We hold people accountable for the randomness and results of our systems. We use carrots and sticks that trivialize their efforts and take away the inherent joy that comes from doing good work. We set targets that are outside the capacity of our systems, and blame people when they don't achieve it. We believe that someone who is totally dependent on us for reward and promotion will be able to give us open, honest feedback. We set up competitions between our people, then wonder why they don't work together.

We don't do any of this because we are mean people, and most of us try to very nice and respectful when we do these things. That's not the point. It is not that we are mean people who are trying to induce disabling fear in our people, it is that we are nice people using management tools that inherently produce disabling fear.

There are better ways.

How Many Calls Did You Handle Today?

The managers of a small internal call center tracked the number of calls handled each day. In efforts to improve customer service, pep talks and incentives were put in place to reward the team if they could increase the number of calls handled without increasing staff. It worked, and within a few months the same group was handling about twenty percent more calls. Success!

Unfortunately, some quick data collection about the purpose of each call revealed that about half of all the calls were not new orders but were calls to follow up on something that hadn't been thoroughly completed - checking for order status, looking for supporting paperwork, providing information missed on an earlier call, reporting an incorrect shipment, trying to find a person, or asking for copies of invoices. All of these demands on the call center were counted the same, a call is a call and they were handling more calls than ever before.

With the focus on increasing capacity, the customer service reps felt pressure and incentive to handle calls more quickly, and so they were. Not dramatically, but shaving a little time here and there on each call to try to speed things up. Unfortunately, this often resulted in less complete communication, a few details missed, and slightly incomplete understanding of customer needs - resulting in more calls that subsequently needed to be handled to fix things up. A similar focus on increasing and rewarding activity in specific departments existed throughout the company, and many of the calls were due to minor problems occuring throughout the organization. Since all outside communication flowed through the call center, it felt the impact of little glitches all over the company.

By tracking the type and frequency of calls, and working to improve the concrete little details in the call center and throughout the company that were contributing to all this failure demand, management was able to methodically reduce the churn, the customer service busy-work. Over a period of six months, the number of calls handled actually decreased, but this was because true customer service was improving significantly; customers were calling mostly to place new orders, rather than to follow up on previous calls. This kind of work never stops, and there is always further room for improvement.

All calls are not equal so don't bother just counting them. Look at which are new, valued calls and which are based on some previous little (or big) failure. Then work systematically to reduce the sources of the failures, throughout the company. That's the key to improving your customer service department.

Marks Without Learning

Helping teach an engineering design class, I was struck by how our addiction to grading interferes with the learning process.

Student project teams were delivering the final oral presentations of their designs (with topics ranging from golf-ball detectors, to heated boots, to pedestrian overpasses), with instructors evaluating them for speaking style and presentation quality. The whole class of eighty students would also watch each presentation, fire a few questions during the Q + A session afterwards, and then grade the presenting group with an automated voting system. Because all of the groups were watching, the groups were not given tips, pointers, or feedback immediately after their presentations; it wouldn't be fair if later groups got to adjust their presentations based on advice to earlier groups.

So, the students would do their presentations, hand in their class work, and then in a month or so, they'd get their final mark, telling them how they did in the class.

If our focus was truly on learning rather than marking, we would make sure each student knew what they did well and what they did poorly, with immediate feedback, coaching and discussion about how to improve. They might get another chance to try parts again, with critiquing and suggestions for further development. In a class where the focus were learning rather than marks, the whole class could progressively improve by engaging in the discussion about each presentation.

So, we have a lot of systems in place to rank people, give them a grade, give them a mark. But we need to clearly understand that this focus on marks doesn't contribute to learning, to improving. We can have learning without marks; let's just make sure that we don't have marks without learning.

Ten Common Assumptions About Performance Reviews

What underlying beliefs motivate managers to use performance reviews? Following are ten that I've commonly seen and heard, all of which I believe are demonstrably flawed:

1. Problems result from individual negligence or mistakes.
2. Success requires holding people accountable for the achievement of measurable goals.
3. Employees withhold effort that must be coaxed out of them.
4. Managers can and must motivate and control the workforce.
5. Evaluation improves an employee's performance.
6. Employees can control their results.
7. An employee's contribution can be separated from the contributions of others.
8. Evaluation of employees improve the performance of the business.
9. Evaluators are consistent with each other, and from one employee to the next.
10. Conditional rewards improve employee performance.