Tuesday, April 9, 2013

Bonuses and Blind Spots


David was a small business owner who ran a product testing company. He was a nice guy—very hardworking and earnest—and said he had brought me in to help him with some productivity issues. Even though he had an experienced workforce with tenure, he shared with me that they were having issues with long cycle times. These caused missed customer deadlines, increased errors resulting in rework, and overall employee malaise.  David had only eight employees so I met with each one of them, asking a series of questions to try and uncover what was really going on. Several of them mentioned a bonus they had received but no one could tell me the criteria required to earn one.  Typically, a bonus would be based on a profitable quarter or year, a reward for extra effort or productivity, or as an annual form of recognition. I assumed it was one of those things.

At the end of the day I met with David and asked what the bonus metric was. He looked at me and said, “I like to use bonuses as a spontaneous motivation technique so I don’t use any formal criteria.” “Oh?” I said, a bit surprised and also intrigued. “So give me an example of the last few times you paid out a bonus.” He said, “I just pay everyone a bonus when I sense that morale is down.”  For anyone who understands classical behavioral conditioning and the concept of reinforcement, it only takes a few minutes for it to register that David is rewarding his employees for acting demoralized and being mopey, and reinforcing that behavior in the process. Thanks to authors like Daniel Pink (http://www.danpink.com/books/drive) and Teresa Amabile (http://www.progressprinciple.com/), we now know that pay is not the key performance motivator. So, not only hadn’t David gotten that memo yet, but was actually rewarding his people for the exact behavior he wanted less of. It was a perfect formula for poor results.

Sadly, when I explained to David that I would need to work directly with him, and not just his employees, in order to bring about the organizational improvements he sought, he refused, insisting that the problems lay with his employees, not him. Although he was an otherwise nice guy, his ego was clearly in the way. For obvious reasons, I did not accept the work and can only wonder how his organization is doing today. There was more to David’s organizational challenges than the random bonuses, but my initial research into his firm showed me that this, along with a few of his other decisions, played a significant role in his employees’ motivation and performance. Although David could not see it, he was having a serious and negative downstream impact.

Keeping your EQ sharp will help you notice your own tendency to engage in behavior that may have unintended downstream impact (self-awareness) and to ask yourself how exactly this behavior may affect the team (empathy). Just as important, a sharp EQ provides you with the self-control needed to make conscious choices about when to follow through on your instincts and when to investigate or temper them to keep work flowing and organizational objectives intact.

 

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