Leaders are in charge of the of the incentives in the organization, and they get exactly the performance from the people that they deserve. All too often the incentive systems are counter-productive and drive behaviors that are inconsistent with the overall compelling directive, strategy, and desired culture. Incentives come in a wide variety of shapes, sizes, and degrees of formality. The formal options for reinforcing the desired behaviors include recognition, rewards, promotions, and sometimes the removal of individuals. Incentives also include informal methods such as the “role model” behavior of leaders and their daily reactions and feedback to employee conduct. The spontaneous reactions of the leaders might be even more influential than the formal incentive systems. High performing organizations align their incentives (structured and unstructured) to ensure the best overall system performance. Bottomline – If you want a different organization, you have to change how you incentivize the people. All of these approaches have to be aligned and consistent with each other and the overall strategy and desired culture.
Step 1 is to align the criteria, measures, and methods used to evaluate employees with the strategy and desired culture. The alignment of the individual assessment is important because this is what will be used to incentivize the desired behaviors through coaching and formal rewards and recognition. It is difficult to overstate the importance of aligning the incentives that guide employee behavior with the overall strategy and desired culture. Yet, it is common for leaders to say one thing, personally do another, and incentivize yet another. This kind of confusion ends up with smart employees doing what they are incentivized to do. Actions speak louder than words and incentives trump all else. Unfortunately, the misalignment of incentives might be the biggest issue preventing organizations from achieving the performance that they “say” they desire. In addition to alignment, there is the need for a comprehensive system that includes all the key aspects of workforce performance. All too often the entire annual review process is based on a special project over and above the daily work responsibilities. This results in employees who do the minimum required toward their daily execution work and spend their quality time on the projects that are evaluated as part of the review process. Why? That is where the money is!!! Alignment is critical, but without leadership, it is a waste of time.
Step 2 is to coach the employees to help them meet the expectations identified in Step 5 E3 People and the related criteria used to assess their performance. Few things in the modern organization are hated more than the “typical” annual performance review process. They often resemble a “dance” in an attempt to make it rain. We do them because we are told to do them. And, there are of course punishments if we don’t comply. The result is often a half-hearted attempt at “filling a square” so as not to get into trouble. Why? Many leaders do not see the value in the annual review process. The first major issue is they are often too infrequent to be of much good. Humans learn best when the feedback is as immediate as possible to the action. Second, they are often encumbered with formality and legalistic activities that are not very useful for much of anything except documenting poor performance in case of litigation. Not that appropriate documentation isn’t important, but it is managing to the lowest common denominator…. Not a recipe for a high performing workforce. If you need to document all your employees’ performance, so you don’t get sued, then you may have hired the wrong people and your time would be better spent improving your hiring process. Third, the feedback is often lacking any real actionable information. The main problem is you can’t “manage” your way to a high performing workforce. It just doesn’t work. What is needed are leaders to inspire, coach, and appreciate their followers and lead them to high performance. And, correct poor performance and hold people accountable as needed. As many leaders and philosophers have noted, “there is no substitute for leadership.”
William James proposed that “the deepest principle in human nature is the craving to be appreciated.” Some leaders have told me that they limit the amount of praise they give, so the person doesn’t get a “big head.” I understand the concern. There is plenty of evidence to suggest that this is a real issue to be considered. However, the issue may be linked to the particular incentives and methods used to deliver them. The superficial, materialistic needs of the ego are not what James was referring to when he noted that appreciation was the “deepest” principle of human nature. People want their lives to have meaning and purpose. Leaders help inspire people with a compelling directive of the mission, vision, and values. But that needs to be reinforced with feedback, appreciation, and yes formal incentives. Good news, showing your appreciation doesn’t cost you anything but does require effort on your part. Choose your incentives wisely because when they are not aligned with the compelling directive, strategy, and culture, then they can be counterproductive resulting in reduced performance and sometimes turnover. High performing organizations employ both leadership and systematic approaches to recognize, reward, and promote the desired behavior. As a last resort, leaders of high-performance organizations also make the tough decisions to let people go who are not able to develop and meet the expectations. Unfortunate, but sometimes necessary.
Organization systems without people do not exist. While it is easy to design a system that will result in a bad performance and turnover, it is difficult to design a system that will result in engagement and high performance. As with all systems, leadership is required to make it work. In this case, leadership that is willing and able to inspire, coach, and appreciate their people and role model that behavior every day. Fortunately or unfortunately, leaders get the performance from the workforce that they deserve. It is up to the leader to decide what they really want and then do what is necessary!
Read more on the other components of the Leadership System.
Enjoy the journey!