How effective is your incentive remuneration, really?

Incentivisation 46025685_sWho doesn't like a bonus? It is always nice to get more in your pay packet than usual. A bonus naturally make you feel good about things, and – particularly when you have worked hard to earn it – helps you to feel appreciated and that all your effort was worthwhile. Even if it isn’t as much as you would have liked, it is still better than nothing! Yet I would wager that there have been times when you have questioned the whole process.

Possibly because you have seen others being rewarded when you didn’t think they deserved it. Or perhaps because earning it has caused colleagues to act in ways that have made your job more difficult. If you are totally honest, you might even admit that you have shaped your own performance targets or measures in ways that make earning your bonus more likely. And that, perhaps, is the major flaw with incentive remuneration or performance related pay schemes: everyone manipulates them but, because everyone has the personal potential to earn more, no-one ever stops to ascertain just how effective they really are.

Yet business publications and management books are full of stories, examples and case studies of the ill-effects of misguided incentives. The problem is that, even if they don’t motivate directly, incentives do shape behaviour, and invariably not to good effect. This is perfectly illustrated by Daniel Pink’s findings on motivation.  (If you have not already seen this ten minute video I thoroughly recommend that you do so now.) However daunting the prospect, his conclusion that incentives are actually counter-productive should be enough to impel you to re-evaluate your incentive remuneration scheme.   

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Legally right or morally right?

Cruise ship 41666596_sI don’t know why. It is not a column I normally read. But somehow my eye was drawn to the report of a man who booked a cruise 18 months ahead, paying a significant (+/-20%, four figure) deposit. Unfortunately he suddenly died a few weeks later. So his daughter asked for this money to be refunded. Her request was refused. The managing director of the cruise company, no less, wrote to her saying, “With our guest demographic, we are all too regularly presented with requests for refund payments due to illness or a sad loss, all of which should be claimed by travel insurance.”

I struggled with this. The whole scenario suggested that the company puts revenue before customer experience. With the MD’s own words indicating that the “guest demographic” makes this a regular occurrence, you have to ask how much of the company’s profits result from this dubious practice of deriving revenue without providing any correlative service. Such justification seems unethical or morally bankrupt. It seems to illustrate a fine line between legal and ‘legitimate’: the decision may have been legitimate but was it is legal? I needed to think more.  

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How is Your Brand?

How good is your brand? How secure is it? Who are your best brand ambassadors? Brand 123RF_41682176_s

Those are some of the questions I found myself asking this week after coming across an article in Chief Executive Magazine entitled, "How to turn your employees into your best brand ambassadors." My instinctive response was that this should not be new to any CEO worth his salt. After all, surely you need employees who believe in your brand, in order to deliver a customer experience that turns customers into raving fans. But, perhaps it is a subject that requires a refresher.

If my instinct is right, and making your people brand ambassadors isn’t already core to everything you do, you have a problem. If your people are not your best brand ambassadors,  your brand will definitely not be all it should be. Certainly this research from my friend Alexander Kjerulf suggests that may be the case. So, now ask yourself just how good your brand is. This also makes it unlikely to be as secure as you might like to think.

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The Secret to Successful Change

I was shocked! And slightly disappointed in myself. In hindsight perhaps I shouldn’t have been, but I was – even though I suspect change professionals are just as prone to it as the rest of humanity. It highlighted something we probably all do often every day but that professional change managers should always guard against.

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Challenge: People Skills or People Management Skills

Potential 11049229_sAre people skills and people management skills the same thing? The question arises from a recent DPG blog that identifies “people skills” as the number one requirement for HR professionals to be outstanding, and explains this by saying. “HR spends so much time dealing with people and people issues, so good people management skills are essential.” This suggests they are, but it is definitely a premise worth challenging. In fact there are several things that bear challenging in all this.

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Emissions, Ethics and HR

As the world gets to grips with the fallout from “Dieselgate” I was amazed to learn that 74% of respondents to a CIPD poll agreed that, “HR should play an active role in building an ethical culture.” Even making allowances for an almost exclusive survey population of HR professionals this seems surprising. One can only assume that they failed to recognise the corollary which is, that in the event of a major ethical failure such as the one that has come to light at Volkswagen, HR would have to be held accountable.  I am sure they wouldn’t like that!

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‘People’s Companies’ would make a moral difference

“We made a mistake.” That was the Volkswagen dealer’s answer when I asked him about the emissions testing exposé. Would you buy that?

Volkswagen is a good example of how quickly a reputation that has taken years to build can be damaged or destroyed. Yet Volkswagen may be better equipped to recover than most organisations. After all the company’s origins lie in Adolf Hitler’s pet “people’s car” project. On top of that, despite the scale of the problem, right now reaction to the revelation appears to vary from outrage to nonchalance, with the latter suggesting that the cause is not lost. It will be interesting to see just how damaging the revelations ultimately prove.

The dealer’s response suggests that remedial efforts are well under way and that a clear and consistent message is being told. Yet I would question the term “mistake.” For me a mistake is something that is either inadvertent or the result of a wrong choice. How much of what happened was a choice?

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A simple solution for transforming a ‘dire workplace’

Do you work in a dire workplace? The odds are that you do. At least according to Jeffrey Pfeffer, Professor of Organizational Behaviour at the Graduate School of Business, Stanford University. In an article entitled "Why we don't get the leaders we say we want” he proclaims, “The state of workplaces, not just in the U.S. but all over the world, can only be described as dire.”

Pfeffer justifies his claim by citing that, whatever research data you choose to follow, “The picture that emerges is consistent: mostly disengaged, dissatisfied, disaffected employees. Moreover, there is no evidence that things are getting better over time.” I am sure you also find this discouraging, even depressing.  After all, it is tough to get up and go to work each day when you feel your workplace is “dire.”  It make no difference whether you are at the lowest level of the organisation or the leader trying desperately trying to change the culture: the feeling is the same.

If, however, you are the leader, you will find scant comfort in the blame that Pfeffer attributes to leaders, or his testimony that “about one half of all leaders are failures in their roles,” and that there is not a scintilla of evidence that more people in leadership roles are adhering to the many prescriptions offered.” The only relief you might find could lie in his explanations for this.

Far be it for me to say that leaders need to be better qualified, but I think there is undeniable merit in his case about the other two causes. Indeed I have myself previously written about how our preoccupation with measures. This is so strong that it has virtually come to be an obsession. Thus while Pfeffer is not wrong in identifying “bad measures” as one of the causes, what I think he has missed, is the relationship between bad measures and the not getting the leadership we say we want. He fails to adequately identify the fact that is the obsession with the bad measures that govern behaviour and that therefore prevents leaders from manifesting the qualities we say we are expecting. The truth is, those qualities still come second to “meeting the numbers.”

This means that there is nothing compelling leaders to adopt or consistently demonstrate the qualities being called for. We are actually placing our leaders in an untenable position where they can never embrace and consistently manifest them because they “have two masters.” This all boils down to what I have called “The Great Management Paradox:” the convention of calling people assets but persisting in accounting for, managing them and treating them purely as costs.

As I have written before, “A leader is someone who inspires people to want the same thing that they want.”  The only way you can consistently do this within an organisation, is to make the employees owners with a stake in in its results. And, in order to do this effectively, you have to stop treating people as an expendable resource and demonstrate that they have a value and that value rises and falls according to the contribution they make to the organisation. And I still have not encountered anything delivers both of these requirements, as my ‘Every Individual Matters’ model does.

From dire to engaged

So, if you truly want to be an effective leader, you should contact me now to find out more.  

Bay Jordan

Bay is the founder and director of Zealise, and the creator of the ‘Every Individual Matters’ organisational culture model that helps transform organisational performance and bottom-line results. Bay is also the author of several books, including “Lean Organisations Need FAT People” and “The 7 Deadly Toxins of Employee Engagement.”

Kill the Performance Review

Death_000013987544XSmallPerformance reviews remain in the news. Last week I wrote about Accenture’s abandoning them, but this week came the even more shattering news that GE – the bastion of the “rank and yank” – is also killing annual performance reviews. This seems to be good news for most managers and employees alike. You need, however, to ask, “What precisely is being killed?”

There are two possible interpretations here. One is that it is annual performance reviews that are being ditched and the other that it is performance reviews that are being discarded. You will readily appreciate that there is a significant difference. So let me ask you, if you had to decide this instant, which option would you choose?

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Beyond the Performance Appraisal

Infinity symbol 21580747_sPerhaps you have heard that Accenture is abandoning performance appraisals. (If not, you can read about it here.) Whenever or however you learned this, you likely immediately wondered, “What are they going to replace them with?” For you cannot judge whether this is a good thing or not until you know that. Even then it is not as straightforward as you might think.

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