Rewarding performance

You may be surprised to learn that performance-based rewards—designed to encourage creative thinking, spur employee engagement and raise productivity—rarely succeed in properly motivating people.

According to the Harvard Business Review and case studies by McKinsey & Company, these programs may increase compliance around stated corporate goals, but they do not have a sustainable, discernible impact on behavior.

Instead, they can lead to internal competition and infighting, or cause people to work just hard enough to reach a reward and no harder. This stifles creativity and causes complacency in employees, doing more harm than good. In fact, where people are performing tasks that require creativity and better problem-solving skills, outcomes are typically even less positive when bonus systems are introduced.

Similarly, when top-level executives are more handsomely rewarded, corporate profitability tends not to increase.

But with the growing talent shortage, companies must be more innovative to attract and retain good employees. Those employees must better understand the importance of their employer’s brand, just as leaders must be role models in the behaviors that drive success in the company. Everyone must understand which specific processes and functions lead to corporate success. Sadly, while leadership often gets the memo, many workers are not shown how their performance impacts operational, financial and competitive outcomes.

So, rather than dangle carrots, leaders need to chop a bunch up every day and nourish their people by spending more time engaging and teaching them. This type of good-faith development strategy is far more likely to foster general creativity or promote task-based innovation than inconsistent rewards that can make people do the right things for the wrong reasons.

After all, every company has a culture, and those who see the value in developing employees by mentoring, guiding and growing talent will keep their good people. Most employees who are brought into a conversation about corporate direction instantly feel an upsurge in their sense of value. They want to understand what role they can play in their company’s success.

So, to foster better performance development, it might be helpful to consider the following.

Inspect what you expect:
• Provide a clear picture on the overall goals of the unit, division or organization.
• Prioritize according to critical deliverables, such as tasks, duties and responsibilities. Map out the key roles played in relation to the greater operation.
• Regularly review, renew and relay the expectations as needs change.

Create a learning environment:
• Recognize mistakes, misunderstandings and missed opportunities as part of the success of the work.
• Collaborate and communicate the expectations and uncover any comprehension gaps.
• Support the efforts and ideas of others and work as a team.
• Consider that the best answers often come when better questions are asked in solving a problem.

Collaborate, starting at the top:
• Build a solid mutual/group understanding of desired performance goals.
• Bring a mix of management levels to brainstorming sessions for a broader perspective on the problem.
• Allow for new ideas and don’t allow a person’s title alone qualify them to be the solution provider.
• Experts are not the only ones who can see opportunities, or how to tackle challenges.

Reward creativity and encourage input:
• Evaluate operational effectiveness, with a focus on the talent demands involved.
• Allow for a balance of agility and established practices for process success.
• Build a supportive environment and value honest appraisals of business operations.
• Identify when competing interests are stalling success, such as when rewards are given for speed versus accuracy.

Build a high-performance culture:
• Grow high-potential performers by helping them develop strategies and improve their execution.
• Invest in talent development.
• Have deliberate high-performance succession plans by selecting the best people for the job.
• Demonstrate the commitment of top-level executives on retention and skill building goals.

Be honest about performance:
• Ask if the job matches the skill of the person in the role as the needs change?
• Don’t delay the need to discuss performance improvement–and do it regularly.
• Get a commitment for change from those you honestly think are capable of doing the work.
• Identify those who don’t perform at a high level and help them succeed elsewhere.

Tracy Clayson is managing partner, business development of Mississauga, Ontario-based In Transit Personnel. tracy@in-transit.com