“The righter we do the wrong thing, the wronger we become. When we make a mistake doing the wrong thing and correct it, we become wronger.” (Russell Ackoff)
I’ve worked in a few companies over the years, both in the UK and NZ. One thing that I have noticed is what seems to happen with incentive schemes:
- They start off as a supposedly great management idea to ‘motivate’ (!) employees to do better and are deliberately set up to be simple to understand and simple to operate;
- After the first annual iteration, feedback is received about the incentive system and much is said about how it isn’t very fair (such as “how come he got a 4.3/5, yet my manager didn’t give anyone more than a 3” or “great, I get marked down for something I have absolutely NO control over” or….you can fill in the blanks!);
- …so Human Resources are asked by management to go into redesign mode, make it more ‘sophisticated’ (read ‘complicated’), and release ‘Incentives 2.0’…which requires much effort to explain what has changed and why this now makes everything okay;
- …and then next year yet more feedback is generated…which leads to yet more redesign. This redesign actually makes it;
- more complicated – “how does it work again?”
- more onerous – the need for evidence!
- more inward focused – away from customer work; and
- more difficult to explain and carry out;
This cycle continues until, if we were to allow ourselves the space to stand back, we would see an ‘industry’ of work surrounding the incentive mechanism, which most people intensely dislike* and mistrust.
* This isn’t a dislike of the eventual monetary reward, but of the game to be played to get there.
A sure sign of reaching such a state is when you see:
- Fancy presentations/ brochures, and drop-in clinics/ help lines to explain the process;
- A frenzied state of panic when ‘performance review’ time comes around (with managers ‘in town’ to judge you);
- Corridor banter discussing what’s happening (“have you been ‘done’ yet?; what evidence did you gather?; if you scratch my back, I’ll scratch yours; how did it go”…again, I’m sure you can complete);
- Management then having to perform meetings to compare/ contrast and ‘normalise’ the data…“so that it’s all fair”;
- A feeling of resignation by the employees of “I’m not interested in what I get anymore….just as long as it’s about 66%, I can’t be bothered any further”;
- Yet more corridor banter discussing who got what, how they feel and what they are going to do about it!;
- De-motivated employees, instead of the intended motivation;
- …and, finally, HR asking for feedback on the process so that “we can make it even better next year!”
There is no ‘perfect incentive scheme’. You can’t keep going until you’ve ‘solved it’ simply for the fundamental fact that contingent rewards drive the wrong behaviours.
So, what am I saying – no money?
Absolutely not! I believe that we should all share in the success of our organisation. But contingent rewards are not the way to go about it.
Now, you may respond with “but that’s what our people are used to…we can’t take it away from them now!” I put forward the following quote:
“No matter how long you have been on the wrong road, turn back.” (Anonymous)
I could put forward a ‘share in the success of our organisation’ method…but that’s not the point. There will be many ways to do this…but first we need to see the need for, and accept, a change in direction.
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