Rewards

The chasm

giantknave Brain Farts , , , ,

dollar-trap…between what science knows & what business does!

In my 3 day ‘Lean/Systems Thinking’ course, I ‘mess with the heads’ of the participants about incentives and motivation. I use material from a fabulous book called ‘Punished by Rewards’ written by Alfie Kohn (1993/1999).

Now, a number of course attendees comment back to me that “isn’t what you are saying the same as that Dan Pink guy?” * and, yes, basically it is. Pink is what I might call the modern day Kohn, the ‘in vogue’ management guru on this stuff…not that Alfie has gone anywhere!

[* Dan Pink wrote a 2009 book on the same subject area as Alfie Kohn’s earlier book. Pink’s book is called ‘Drive: the surprising truth about what motivates us’. I’ve noticed a Dan Pink RSAnimate informally making its way round]

This post is about a Dan Pink TED talk passed to me by a participant on one of my courses (thanks for sharing), in which Pink eloquently and passionately puts across his points. It is 18 mins. long and well worth watching.

The key message in the TED talk is that:

There’s a mismatch between what science knows and what business does.

‘Carrot and stick’ (as in contingent rewards) is an ideology, not a proven method to get the desired results. In fact, worse than being ineffective, it can do much harm.

Now, once you’ve watched the TED talk, you will know what the key message is about and that Dan Pink puts forward some scientific research as evidence. You might think “yeah, anyone can put forward an experiment or two, but I bet there are other experiments that ‘prove’ the opposite!”

To answer this: If you read Kohn’s book (which is a detailed and brilliantly written review of the body of research around incentives) you will find that:

  • experiments have been done on this stuff since the 1950’s, each and every decade, right up to today;
  • the results of these experiments have been replicated again and again and again; and
  • there isn’t any credible scientific evidence that contradicts the findings.

So what about service organisations?

Cast your mind back to the candle problem that Pink refers to, and whether the tacks are provided inside or outside of the box.

In service, the necessary actions are rarely a simple and obvious ‘cookie cutter’ response. Rather, the tacks might be scattered under the table, the box still a flat pack and the candle missing a wick!

Every customer service person should be thinking about the unique customer they are dealing with, their unique reality and then providing excellent service that satisfies (and hopefully exceeds) their specific needs.

You might come back at me and say “but if we standardise everything then our people don’t need to think. They just need to ‘turn the handle’ and THEN incentives work…don’t they?”

Two comments on this:

  • do you think the customer wants to be standardised?
  • do you think our people simply want to ‘turn a handle’?

I think not!

Be careful of gimmicky management fads:

Pink talks about a number of innovative techniques to get people thinking autonomously. He refers to Atlasian’s FEDEX day, Google’s 20% time and ROWE. Each makes some sense.

However, if a company simply picks up one of these ideas and ‘implements it’ BUT doesn’t change the underlying thinking, it won’t work.

It’s not about the gimmick (and you don’t need to copy theirs), it’s about the underlying thinking!

Kohn sets out a 3-step approach:

  1. abolish extrinsic motivators (incentives, competitive awards….);

(“pay people well and fairly…then put [incentives] out of their minds.”)

  1. then re-evaluate ‘evaluations’: move from formal time-batched judgement events to continual 2-way conversations divorced from the issue of compensation;
  2. then create the conditions for authentic motivation:
    • Collaboration: across the horizontal value stream
    • Work content: make it interesting
    • Choice: allow people to experiment and learn

And a reminder of that great John Seddon quote:

“with every pair of hands you get a free brain – but whether the brain is engaged depends on the design of the work.”

Making a wrong thing righter!

giantknave Brain Farts , , ,

wrong-way-sign“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.

Don’t feed the animals

giantknave Brain Farts ,

dont feedWe’ve all seen the signs in zoos, domains, at car parks in our national parks…and we understand the point, even if we haven’t considered it deeply.

So…let’s consider: why shouldn’t we feed the animals?

  • We stop them thinking for themselves: they become fat and idle, expecting the food and gorging on it as and when it is delivered. They come to expect it, even knowing when the feeding times begin;
  • We alter, and harm, their natural abilities:
    • they lose their motivation of solving their feeding needs for themselves and of real satisfaction with their successes
    • even worse, they now take on new behaviours
  • They become dependent on us: once reliant on us, if we take the food away there will be a period of confusion and likely pain;
  • We create un-natural competition in what used to be a structured independent community: we witness the fighting at the artificial food source;
  • Often, the food we give them isn’t healthy for them and certainly not as healthy as what they get in the wild…we try our best to imitate it but it’s never the same thing;

…we become their keeper, they lose their instinctive capabilities. We no longer witness all the wonderful things that they are capable of. They submit to our control.

I am really using an analogy for contingent rewards: the offering of something on a contingent basis in order to (attempt to) control how someone acts…which makes these rewards extrinsic by definition.

What do we try to do instead?

  • We attempt to safeguard, or provide (if it has already been destroyed) a natural environment in which the animals can thrive!

So how do we treat people in our organisations? Now, to be very clear, I am not putting you or I ‘above’ anyone by writing this post. I am but one of the animals in an organisational system, just like you or anyone else.

If contingent rewards are being used then the Board determine how to feed the Executives at the top, whilst managers handle the feeding of the process performers at the customer interface.

The point is that contingent rewards will have highly undesirable effects!

It’s worth noting that animals can be successfully introduced back into the wild, to become amazing again! Whether this is successful will depend upon how severe the dependence has become and the effort (both time and expertise) put into undoing this.

The analogy is not perfect but I hope you see the point. Clearly, animals in the wild are dependent on their natural habitat for survival and nature isn’t always kind. Consider that our natural food of choice is to be intrinsically motivated in what we do…and, given the right habitat we can thrive!

Money as pay

giantknave Brain Farts ,

CashThere is nothing wrong with the idea of money itself: it is simply a logical medium to enable the exchange of goods and services – it stops me trying to work out how many of my carrots to exchange for your goose.

But money as pay needs some careful thought.

We might break money for payment into three aspects to consider: as ‘hygiene’, ‘equity’, and ‘reinforcement’…and after that we’ll consider ‘joy in work’:

Hygiene: Frederick Herzberg studied the effects of financial incentives some time ago and observed that too little money can be a serious problem – we all need to cover the costs of our basic hygiene factors such as a roof over our heads, food in our bellies, clothes on our back and a feeling of security and acceptance in our society. It is highly demotivating not to have these covered. However, once these are in place, the provision of more money does not necessarily equate with more satisfaction.

Equity: The human being does not cope with injustice well! We all have a very strong inbuilt sense of fairness. So, once we’ve taken care of the hygiene aspect of pay, we must also cover equity. If you and I have a similar role but we are paid differently, then this WILL be a source of discord.

The more opaque the methodology surrounding compensation then the stronger the suspicions of inequality there will be. Note that a forward thinking American company, Menlo Innovations, takes transparency to such extremes that it posts employee salaries on its office wall! Whilst I am not saying we should go this far, if you find this idea objectionable it is worth asking yourselves why! If it is a fear of others realising how much you are paid as compared to them….then perhaps you fear you are on the positive end of an inequitable pay scheme.

Reinforcement: So, after covering hygiene and equity, we are left with the practise of contingent rewards: the offering of money (or some other perk) on a contingent basis in order to control how someone acts. Incentive/ bonus schemes sit squarely in this camp.

Alfie Kohn’s eye-opening book ‘Punished by Rewards’ explains the damaging effects of contingent rewards. He clearly sets out five major reasons as to why this is so, along with a depth of supporting research over many decades. In summary, contingent rewards:

  • Punish: those that don’t meet the criteria will not get the reward and will be demoralised – what might be seen as damage caused by the fall out , or ‘friendly fire’;
  • Rupture relationships: they interfere with the desire for collaboration and a sense of community. Competition makes others a potential obstacle to your ‘success’;
  • Ignore reasons: they are lazy – they do not require any attention to the reason for the problem in the first place, meaning that the ultimate cause will not get resolved;
  • Discourage risk taking: we do exactly what is necessary to get the reward, and no more. Research has shown that contingent rewards thwart innovation;
  • Focus people’s energies on getting the incentive, not on doing the work…which leads to lots of highly undesirable side effects!

The ‘money’ paradox:

A number of major surveys have been carried out to compare what a worker looks for in a job with what their manager (and even their peers) thinks they are looking for. What is really interesting is that:

  • the manager and peers rank ‘pay’ as being of number one importance to the worker; but
  • the worker himself ranks ‘pay’ way down the list*, putting ‘interesting work’ first.

(* 5th out of 10 ‘job factors’ in one study and 6th out of 10 in another)

So the paradox is that ‘I’ think that interesting work is most important but, conversely, ‘you’ think pay is most important to ‘me’…which would explain many a management decision based on this erroneous belief about pay.

Joy in work:

It is also interesting to consider the results of surveys about why people are unhappy with their jobs. The main reasons that arise include lack of variety or challenge, conflicts with manager or peers, and too much pressure. Salary doesn’t register as a major issue.

It would be interesting to consider why people leave an organisation and consider how many cite the primary factor as being that they weren’t being paid enough.

It is worth thinking about the following from Alfie Kohn:

“Notice how many people, regardless of how they feel about their jobs, or even how they are paid, are apt to pour their souls into tasks that they pursue in their free time: making music, fixing cars, decorating rooms, puttering in a garden, and of course, tending to their children. This work is often hard and time-consuming, and it is done with no thought of remuneration. Overall, the point is that money isn’t the point.”

He proposes that, if we want people to want to come to work on a Monday then the first thing we must do is pay people well and fairly “and then do everything in your power to help them put money out of their minds.”...then, and only then, we can work on creating the conditions for authentic motivation.

In conclusion

As Deming wrote “Pay is not a motivator”.

Now, you might respond to this with “well, I get results from offering contingent rewards“…and I would reply “sure you do…you get people chasing the rewards on offer…whatever (and in spite of) the consequences for the system”. I would add that you can’t blame them for behaving so – this is merely a product of the environment that you have provided for them.

Just imagine what your organisation, and its people, together could achieve if they were 100% focused on the actual purpose of the organisation and its primary value streams.