Differences in Performance Perceptions

As the recession pushed organizations to practice care in spending while attempting to hang on to their highest value talent, pay for performance experienced a renewal. Faced with limited resources and increased demand for efficiency, leaders appealed to their higher level performers to do more with less based on the assumption that a targeted approach would be less costly and would make sure the money benefited those most valuable to the organization.

Now, as the economy improves, organizations seem to be questioning if pay for performance actually worked. Meaning, did it actually help to retain and reward the best talent in the organization? Similarly, if they failed to implement it during the downturn, many are asking if it is too late to join those already providing performance-based rewards in order to increase competitiveness in the future.

In all fairness, the recession did not spawn pay for performance and the mixed results of its use predates this decade. However, like other crises, leaders tended to risk change when experiencing sudden or dramatic uncertainty.

Over the last several months, I have been examining some of the experiences of those that implemented pay for performance during the downturn. Although the research did not explore every facet of these programs, a simple, yet central question kept reoccurring: do leaders and employees have the same perceptions of the pay for performance programs? Based on a sample of six major organizations that completed at least three rounds of reviews in the last five years, leaders, supervisors, and employees were asked a series of questions on their perceptions of the program’s effectiveness. A few of the major findings related to the mission, understanding, and results of the program appear below:

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Approximately 75 percent of leaders felt the program accomplished its stated mission. In most cases, the stated mission involved recognizing and rewarding high performers. Slightly less supervisors agreed with the question, while a little less than a third of employees agreed. These results would not be atypical of other leadership initiatives that come from the top down. Most pay for performance programs experience a communication as well as execution gap between levels.

The next two questions focus on the communication and understanding elements of the program. Not surprisingly, leaders possessed a high level of confidence that employees understood the system, while supervisors were less confident at approximately 56 percent.

On average, about 38 percent of employees agreed that they understood the tool and how compensation related to it. Similarly, leaders and supervisors felt confident that employees not only understood the program’s tools, but also know what actions and behaviors result in a higher score and more compensation. Supervisors appear the most confident. Given their role in ensuring that employees know how to improve, this result is not surprising.

The last question addresses the outcome of the program from a process standpoint: did the right people receive the reward? Similar to the other three questions, employees feel that the intent did not match the outcome. Roughly 31 percent of employees indicated that the reward went to the biggest contributors.

Some might argue that the results point to the inadequacy or even inappropriateness of pay for performance as a method of recognition and reward. Although it could be an element in that debate, I would argue that the results point more to a lack of appropriate appreciation of the complexity of managing human performance. Like most elements of management, ensuring that results reach potential is not easy. In the next posting, I will explore some of the actions of those that were more successful with their programs.

Motivation and Money

motivation2Most of us know the feeling of having to strengthening our resolve to do something that we dread. As a student, it may be completing homework that holds no interest to us, attending a class that lulls us to sleep no matter how much caffeine we consume, or spending the evening with an unwanted guest. As adults, the sources of dread many times only expands. The workplace holds its share of dreads, including work assignments, interaction with the boss, or team meetings with no real purpose other than to waste time and inflate egos. While it is easy to point to motivation when recognizing desirable outcomes, it also plays a role in helping us overcome the undesirable moments that we have to push forward if we want to be successful.

Given this duel importance, you would think that motivation skills would top the arsenal of things that a typical manager or leader has access to and utilizes. Nevertheless, most experiences point to an awareness of the importance of motivation, yet a lack of skills and application. Moreover, most of us believe that the best method of motivating someone is money. In other words, we assume that monetary rewards will help us influence individuals to exhibit the behaviors that we desire.

Increasingly, research is finding that money may afford some short term change in behavior, but the most may be greater than we think. So, let’s talk a little about motivation.

What is it? According to Deckers (2010), motivation encompasses the process whereby a person is moved to take action. The process begins with an unfulfilled need that creates a sense of tension that leads to drive. The drive results in behavior to reduce the tension from the need. As most of us know, incentives are key to accomplishing the desired outcome since the two become directly linked together.

What are the sources? The sources of motivation arise from internal (intrinsic) and external (extrinsic) factors. Some of the internal sources include evolutionary prompts, psychological states, emotional cues, self-esteem, and relative experience. External sources typically involve incentives and goals. For those of us that lead, if we could unlock the formula to motivate people, we would do that. However, research demonstrates that individual response to internal and external factors vary, considerably. While some may be motivated by money, others might desire recognition of their peers, personal satisfaction, autonomy, or emotional validation.

Most of as leaders look to money as a motivator since it is easier to understand than more internal factors to influence behavior. Although ease of application should surely play a role in managing motivation, outcome should be just as, if not more important. As Frederick Herzberg made clear, how we feel about our work has more to do with outcomes that how we are rewarded. In other words, most of us can be “bought” to do work we do not want to do for a period of time, but it is unlikely we be exceptional at someone we hate for the long term, regardless of the rewards.

Research repeatedly demonstrates that money assists with attracting and retaining people, but loses it impact very quickly at influencing their behavior. Recent work by David Rock and Jeffry Schwartz found that autonomy, status, fairness, and relatedness pay larger roles in successful motivation. A 2012 study by Galaxy Research found that only 22 percent of employees were motivated by money and bonuses, while 26 percent gained motivation from peer support and interaction and 22 percent from challenging duties or learning new things. One of the most comprehensive examinations of pay and motivation was conducted by Tim Judge reviewing 120 years of research to synthesize the findings from 92 quantitative studies that combined data from over 15,000 individuals and 115 correlation coefficients. The combined result found that pay and satisfaction possess a very weak correlation, approximately .14.

So, what happens when we focus on extrinsic rewards besides not always receiving the outcome we desire? A big bi-product can be reduced intrinsic motivation. Edward Deci found that regardless of the reward type, extrinsic rewards reduce intrinsic motivation and cumulative motivation. Specifically, he found that for every standard deviation increase in reward, intrinsic motivation for interesting tasks decreased by approximately 25 percent. When the employee knows the actual value of the potential reward, intrinsic motivation decreases by about 36 percent.

What does this mean? Basically, monetary reward is one method of influencing behavior, but there are hidden costs. In addition, the benefit to the organization can be much greater when we address those more intrinsic factors that require us to understand those that work for us.

Practice and Preparation Makes…

“Once a musician has enough ability to get into a top music school, the thing that distinguishes one performer from another is how hard he or she works. That’s it. And what’s more, the people at the very top don’t work just harder or even much harder than everyone else. They work much, much harder.” –Malcolm Gladwell

Hard-Work-AntLast week I worked with a group of employees on how to improve team performance in a large organization.  The organization has grown significantly during the last few years, but the level of success varied across the different divisions and areas.  As I met with different groups, I asked what made their team successful compared to other teams.  More than once, differences between groups were equated to “being lucky.”  After several groups, one of their youngest and most successful managers stood up, looked around, and said, “The real difference between our team and others is that we only ask that our team work harder in preparing and delivering than everyone else.”

We have all seen a star athlete, eloquent speaker, or successful coworker and thought how lucky they must be.  A key part of the human mythology pertains to the hero who is born to destiny.  Although most of us do not believe in “gifts from the gods” where mere mortal reach incredible heights, accomplish supernatural deeds, and become the substance of legends, we still hold on to the assumption of the “incredible” to explain success.  The less romantic, yet real side of success is that hard work makes the difference.

Malcolm Gladwell in Outliers: The Story of Success takes on the human myth of success and concludes, “Success is not a random act. It arises out of a predictable and powerful set of circumstances and opportunities.” Although he addresses the importance of family, community, and social influences on success, the changeable factor that most of us can control is how hard we work.  Put simply, “Success is a function of persistence and doggedness and the willingness to work hard for twenty-two minutes to make sense of something that most people would give up on after thirty seconds.”   How hard we work in preparation as well as performance makes the difference between not only success and failure, but also success and exceptional success.

Similar to Gladwell, Timothy Koegel captures the importance of hard work and preparation by discussing the root of success of NFL athletes.  During the regular season, the average NFL player participates in 65 offensive or defensive plays.  The average play lasts approximately 5.5 seconds.  As surprising as it might seem, the average player prepares 50 to 60 hours a week, but is on the field involved in a play approximately six minutes a season.

No matter how connected or automated thing become, hard work is still the key to success.

Something in Between

motivationMost of us played a game when we were young that involved selecting a favorite thing between two options.  In elementary school, the game involves receiving two things that are equally pleasing, such as ice cream and cake.  By middle school, the options become a little darker.  The game typically involves two rather terrible options, like being bitten by an alligator and falling off a cliff.  The player selects the less horrendous of the options as his or her peers laugh.   As the haze of the teenage years moves away, we return to the better of two options game.  It might be as simple as where would you rather vacation: the beach or mountains?

When someone answers that they would like to vacation at the beach and the mountains, most of us would agree with the answer even if we felt that “both” is not one of the options.   Who would not want to visit both? Similarly, even the most fashion conscious person will enjoy old jeans and a tee shirt some days for a change.  Emotions and feelings play an important role in this duality, but in most cases, we should accept that we are multi-dimensional beings that can hold competing ideas and desires.

How does this human trait influence us in the workplace? Although preference by definition pertains to a specific option possessing higher utility for an individual, most of us operate with mixed preferences.   Who has not wanted to be the office superstar and parent of the year?   However, even as these feelings occupy us each day, as leaders we assume that people work from a single and primary dimension.  Most workplaces have stereotypical categories to capture a person’s individual emphasis:  family man or woman, work to play, climber, shark, or time doer.  Once granted, these images follow us for long periods of our work careers.

When something outside of the norm occurs, how do we explain when someone exceeds expectations, develops a great plan that really works, makes a big sale, or excels in a new area?  Our first inclination might be to assume a cosmic accident occurred.  Although chance affects us all, a better explanation arises from mixed preferences.  In other words, actions and events unlocked the person’s potential.  Most people want to succeed and by removing barriers we increase the chance of collective success.

A key part of being a great leader starts with understanding our employees work with multiple dimensions and finding the “code” to unlocking their potential by moving the continuum the right direction.    What can we do today to unlock potential?

  • expose employees to new things;
  • take the time and really listen to what they are saying;
  • care about  your employees as much as you want them to care about your team and organization; and
  • find out what motivates them and customize the work experience for each employee.

Why Should We Recognize Greatness?

Employee recognition is a key part of developing and maintaining a highly productive workforce.   Although at times it might be thought of as being a nice gesture that an employer uses periodically to make employees feel good, in reality, it is an important tool for communicating what is important to an organization.  By recognizing certain behaviors and the associated outcomes, an employer specifies for employees what they would like to see repeated in the future.

When an organization puts into place an effective employee recognition program it accomplishes several key things:

  • establishes that the organizational culture values high performance;
  • sets the standard for the difference between average or acceptable and high performance while encouraging employees to close the gap;
  • attracts highly qualified candidates to the organization that want to work in a dynamic, high performing environment;
  • develops strong linkages between employees and managers as they jointly seek to improve organization;
  • boosts morale when employees are made aware that the employer notices their contribution and provides recognition in a public manner;
  • encourages team members to develop behaviors that exhibit innovation, calculated risk taking, and process improvement; and
  • demonstrates that the organization possesses opportunities that lead to employee growth and development.

Research has demonstrated that there are five key characteristics to an effective employee recognition program:

Best Practice
All team members can participate in the program.
Clear and specific guidelines are provided that identifies the rewarded behaviors and outcomes.
Possesses objective measures that employees can accomplish.
Everyone that meets the identified criteria is rewarded.
Recognition is done in a timely and consistent manner with a small award.

 

By funding and implementing an employee recognition program, an organization’s goals and objectives will be realized in a more efficient and effective manner.  Moreover, customers will receive a higher level of customer service.  It is a well-documented fact that the more that employees find their workplace assignments, environment, and relationships to be rewarding, the more productive they are.  Employee recognition is a key part of that work equation that leads to better results.

 

Nature of Slopes: Building Motivation

All of us have wished that we could encourage motivation by simply waving a magic wand and transforming our workforce.  How many times have you heard an employee say that a specific task is not his or her job, I don’t know why we have to do this, or it is not on my job description?

The reason why the wand does not work is captured in the nature of slopes.  In order to illustrate the nature of slopes, a short story from last summer might help.  For those of us who have sought to hike in the mountains and reach the top of even a small, well-kept hill in national park, you have probably found that going up is much harder than going down.

I took my family to Colorado last summer and hiking to the top of a small mountain was a much anticipated part of the adventure.  Our family spent several weeks looking at maps, talking about trails, and preparing our supplies.  On the day of the long awaited hike, the kids were very excited.   However, the initial excitement quickly faded as the path lead to higher elevations and each step took a little more effort than the last.  About half way to the top, the mood changed significantly and a rotating mantra of “we are never going to make it to the top of this mountain, I can’t take another step or I will die, why are you making us do this, and this is not fair” accompanied each slow and deliberate step.  The goal changed from we will make a quick hike to the top and spend the afternoon relaxing to taking five or six steps, sit on a stump or against a tree and talk about how close we were to the top and how nice lunch is going to taste.  At each stop, I offered a few words of encouragement before resuming the climb.  The stops slowed our progress considerably, but it gave everyone just enough encouragement that we made it to the top.  After eating lunch overlooking an amazing valley, we started down the mountain and I was very concerned we would continue our “step, complain, step” approach to “enjoying” the outdoors. The moods changed dramatically after we started to descend and the discussion changed from hoping to survive the “family death march” to what would we have for dinner and what are tomorrow’s activities.  The transformation was almost miraculous and it has been long enough now that I am actually thinking about trying it again.

What are some simple lessons for your organizations based on a day of fun in the woods?

  • Motivating the workforce requires considerable energy, commitment, and time;
  • Fellow climbers (workers) need much more encouragement when ascending than we might expect;
  • Not everyone climbs at the same rate or responds to the same encouragement;
  • It is much easier and quicker to roll down a hill than to climb it; and
  • Sometimes it takes longer to reach the top than we hoped.

The important thing to keep in mind about motivation in times of crisis is that the climb will be hard and requires small and incremental steps with a lot of encouragement.  When others may not be happy about having to climb, we have to tap into what makes them want to succeed.  Although it may seem easier to go down, eventually the climb has to be made and going on from where you are is easier than starting over.

People Watching: Watch and Learn

Most of us entertain ourselves through people watching at least once in a while.  It could be at the mall, in a restaurant, or even our child’s school.  There is something fascinating about watching the small gestures, plethora of facial expressions, and odd quirks of other human beings, especially when we feel we are watching without the person’s knowledge.   Although it is considered more of an art than a science, some people take it very seriously.  Wikihow.com even has an entry for it to help prepare the aspiring watchers: http://www.wikihow.com/Begin-People-Watching.    The site defines people watching as:

observing people to get a feel for the beauty and rhythm of the community around us. For some people watchers, it’s about creativity, using the moments of watching to try and guess at another person’s story just from mere observation, and embracing the fun of what is, in effect, an amateur social science.

Although some might be drawn to the “beauty and rhythm of the community,” most of us are just curious of our fellow human beings and their behaviors.  Moreover, we all probably know someone that as an amateur social scientist can weave a very dramatic story of why someone holds their bag a certain way or always cuts their food left to right.  An old friend had this gift for invention.  He could watch someone do the most mundane of tasks and create a yarn of considerable detail, complexity, and adventure based on the clothes, facial expression, posture, and activities of the individual. A frazzled shopper hid the identity of a secret agent while the tired mother of three seemed to live a much more interesting life than one would expect.

At this point, you might be wondering why a discussion of people watching is beneficial to me or my employees?  The answer is if you want to be successful when interacting with others, it is important to comprehend their motivations, thoughts, and patterns.  Most of us assume that being human makes us true experts in other human beings.  When we look at the state of most relationships of any sort, clearly that is not the case.  Think how often we verbally or internally reach the conclusion that we do not understand why someone did what they did.  As you consider how better to comprehend those around you in your workplace, there are three important lessons we can learn from people watching:

  • Observation is important
  • Read the clues
  • Judge carefully

Observation is Important

Given how busy we are at doing our own work, we are sometime oblivious to those around us and their situation.  When trying to meet deadlines, balance home and work, and ensure that work is done as productively as possible, it is tempting to “block out” the rest of the world.  If want to understand and possibly support or even motivate those around us, we have to open our eyes. By watching people we gain a basic understanding of what is important to a person, how they wish to be seen by others, and how they are reacting to what is inside and outside around them.

Read the Clues

Once we have opened our eyes, we need to do something with the information.  More than a few times, I have worked with a manager that said he or she knew something was wrong based on the employee’s behavior and appearance, but just “filed the information away.”  These same managers only later link the observed behavior with a reduction in engagement and productivity.  In most cases, the elapsed time is sufficient to have diminished the output of the work unit and created a new challenge.  The best approach is to develop the capability to recognize the subtext of behaviors.

Judge Carefully

Once we begin observing and thinking about what we see, it is important to determine the best course of action to take.  Things are not always what they seem and we need to carefully weigh the potential action we want to take based on our observations.  I worked the last few weeks with a group of managers that did a good job at observing and understanding the reasons behind certain employee behaviors, but they always selected the same method of addressing employee behaviors.  A key lesson of observing people is that they are all different and respond differently to different actions.

I would encourage you to try people watching.  Next time you have an extra moment at work take five minutes and see what you can observe.