Nearly half a century ago manufacturers realised that setting pay on piecework rates alone, payment by number of items processed, led to several undesirable consequences.
Problems with quality, over or under supply, paying people not to produce (lack of raw material or machinery) and general gaming of the system were endemic. The problems were limited only by the imagination of the people working there.
Today in 2011 there is a slowly dawning realisation that the intensive bonus culture, used in many sectors, produces many undesirable results. It would not be unreasonable to use the descriptor “addicted” to describe the management processes in some organizations – addicted to bonuses.
Another day I will write about the pernicious psychological effects of paying people by results. Sufficient to say the NHS in the UK shows some of the symptoms.
Now we have a problem. How do you wean an addict of his drug?
Our experience of changing behaviour is that it takes time. Specifically our experience is that a reasonably dynamic change programme will take 18 months to change 90% of the people’s behaviour.
During the change programme the management communication must be consistent. People will seek any sign of loss of focus to question management’s commitment.
This is a ten step change programme to move from a bonus driven management style to one of inspiring achievement through leadership excellence.
1. Explain the goals
An organization needs goals, a vision, and a purpose. No-one will get enthralled by a 7% ROI vision. Wouldn’t it be inspiring if we had a NHS vision of “in place of fear”.
Whatever your organization’s purpose, it must be fully communicated to every employee. The goals can be hard or soft measures – so long as they are inspiring.
2. Get buy-in
The more people buy-in to the goals, the more they align themselves with the organization’s pursuit of its objectives the more they strive to succeed.
The better the communication process the greater the buy-in. Remember 18 months to change 90% of people’s minds.
3. Layer by layer
The communication has to come from the top but be spread from each people management node. Each layer receives the message and passes it on to their direct reports.
I would recommend a written statement to read. It is amazing how things change in the re-telling.
4. Recognise good behaviour
When people behave in a way that supports the organization’s pursuit of its objectives the person should be rewarded. No, not financially but with a thank you. It is always a good idea to bring a bigger Boss to say thank you to create a “celebrity”, success razzamatazz around the thank you.
5. Investigate poor performance
Similarly poor performance cannot be ignored. The people manager needs to have a quiet discussion about what went wrong, starting from the basis that training, resources or some such was inadequate and offering help.
If help is needed it should be given.
When discussing poor performance we focus on the person’s behaviour not the person.
6. Feedback performance in relevant time
One of the differences between Football and Rugby Union is the continuous flow of the game. Football does not suffer from the delays while the Video Referee is consulted to determine if a try was valid. Football is sometimes plagued with doubts over whether the ball crossed the goal line too, but the referee has to say without a Video Referee.
Perhaps for fairness they should use a Video Referee but to keep the speed of play not wait for the result. They could announce the score at the end of the game.
Do you think the game would lose some excitement, some appeal, and some intrinsic motivation if the score was kept secret until the end of the game: until it was too late to make extra effort to win that result changing goal?
In an organization the feedback of results has to be in the timescale that allows people to change the end result. It is better to have approximate results if they are fast to produce. Then people will adjust their work rate to make up a slow start.
7. Financial rewards
I will assume the organization has a sensible salary scale policy.
To aid the transition from bonus addict to inspired achiever it would be sensible to introduce an average performance bonus. This takes the attention away from specific instances toward medium term behaviour. A rolling six week average of performance linked to pay is a good half way house.
8. Appraisals and scale changes
The bi-annual appraisals will discuss behaviour against goals. Clearly on goal behaviour is of greater value to the business. A person regularly showing this supportive behaviour should be moved up the salary scale.
If carefully designed each increment on the salary scale can be accompanied by a lesser reduction in bonus. This will reduce the effect of the performance bonuses on the better people.
9. Underperforming people
Eventually though the situation has to be resolved. You should be in no hurry to do this. No-one wants to work for an organization where one bad day gets you fired.
Obviously the Disciplinary process must be followed but more than that the manager should bend over backwards to give one more chance.
The rule of three is a powerfully simple concept . If you have to talk to someone more than three times for the same poor behaviour then perhaps that person is not going to make the grade in that position.
There may be other positions relevant to the person’s abilities but you must manage all poorly performing people to become well performing. You cannot accept for ever a sub-standard performance.
10. A Leadership programme
You should have the support of a behaviour change expert to guide through the maze of appropriate responses.
Programmes such as our “The Inspiring Achievement Programme” will give you the tools and understanding to take your people through this journey.
Moving away from a bonus culture and achieving higher performance is to be expected. The transformation process will take around 18 months during which time the organization’s communication has to be consistent with the new management outlook.
There is a management investment needed to achieve this. The people need to be managed, need to be shown inspirational leadership. Don’t underestimate the challenges to achieving this.
When the transformation is completed you’ll discover you have an organization that responds more quickly, is innovative and is significantly more highly performing.
You can find more information on www.motivationmatters.co.uk