informal coalitions

Je ne target rien - Enabling performance in organizations

In the previous post, I endorsed a recent article in the Sunday Times, which pointed to a number of flaws in the widespread practice of linking individuals’ pay to their perceived performance.

In addition to the problems identified in the article, I called into question the fundamental premise on which performance-related pay is based. That is, that direct relationships can readily be established between organizational outcomes and the decisions and actions of specific individuals.  The complex social dynamics of organization make such links impossible to establish.  In other words, it is simply not possible to isolate the effects that the intentions and contributions of a particular individual have on organizational performance.

So the challenge to target setting and performance-based rewards for individuals can be made on two fronts:

• First in relation to the supposed effect that these have on an individual's tendency to work more effectively than he or she might otherwise do (that is, the proposition that targets increase motivation, focus effort, and enhance accountability).
• Secondly, as regards the complex social dynamics of organization that inseparably intertwine the intentions, interactions and contributions of those we are seeking to appraise with the intentions, interactions and contributions  of all other participants – both ‘within’ the formal boundaries of the organization and ‘beyond’. These dynamics render the notion of cause and effect meaningless in relation to the effect that individuals' contributions have on organizational outcomes.

Fundamental flaw in performance-related pay

An article by Carly Chynoweth, in the Appointments section of the latest Sunday Times (5.2.12), includes a refreshing challenge by Warwick Business School professor, Bruno Frey to the notion and practice of performance-related pay. The article was no doubt prompted by the current furore over the size of executive bonus payments and other 'rewards for performance'.

Referring primarily to the pay of CEOs, Frey’s main suggestion is that target-based approaches to bonus payment should be scrapped.  He argues that any such pay should be based instead on an annual, retrospective judgement about the nature and extent of bonus that a CEO’s performance merits.

Several of his points resonate strongly with those I have made in earlier posts, such as Building commitment –v- rewarding performance and Public sector pay review – Off target. At the same time, his notion of an annual appraisal, based on hindsight, still assumes a degree of objective knowledge about the causes of performance outcomes that I don’t believe is credible in the socially complex world of organizations.

Reframing accountability

Discussions of accountability can too often degenerate into the search for a scapegoat. That is, someone who can be blamed for perceived (i.e. headline) failure or underperformance.  This might satisfy the felt need of some people for retribution. Or offer a seemingly clear-cut resolution to an otherwise more complex challenge. But it does little to encourage people to comment candidly on their own performance or to enable them, individually and collectively, to strive for excellence. 

Public sector pay review - Off target

The government-commissioned Fair Pay Review, was published earlier today. Led by the Work Foundation's Will Hutton, the review team recommend a new performance-related pay deal for senior executives that might eventually be extended to middle managers.  The proposals include a suggestion that managers should have to "earn back" a proportion of their pay (say 10-15% of it) by meeting personal performance targets. Provision would then exist for "excellent performers" to earn an additional, bonus sum.

According to an article in HRZone, Hutton maintains that no pay system can be fair if it fails to reflect individual performance.  And there's the rub. The whole pay-for-performance approach - whether in the public or private sector - rests on the proposition that organizational outcomes can be related, in a simple cause-and-effect way, to the 'performance' of individuals.  They can't.

A common sense approach?

It might seem like common sense to pay people according to their perceived performance.  But it is a version of common sense which still sees the business world as ordered, predictable and ultimately controllable.  So where is the flaw in this widely used practice?  And is there an alternative?

Escaping from the Activity Trap

Many years ago, I came across the notion of the "Activity Trap", a phrase coined by George Odiorne in his book Management and the Activity Trap.

This is one of the dynamics of organization that I have recognized time and time again, both during my time as an in-house manager and latterly as a consultant. I’ve referred to it in passing in a number of posts but, prompted by a recent consulting assignment, I felt it was worthy of specific mention.

Organizational values and performance appraisal

The formal appraisal of performance features prominently in most organizations’ approaches to people management.  Typical aims include providing a structured way of monitoring and evaluating people’s performance; using this assessment to inform aspects of capability development, career progression and employment decisions; and relating it in some way to financial reward.

In many cases, the assessment includes a review of the extent to which individuals are felt to ‘live’ the organization’s values. And it’s this aspect of the overall process that I want to focus on here.

Discipline in organizations – On ‘hot stove rules’, performance conversations and an opportunity to learn.

The October 2008 edition of Management Today bemoans the fact that the management of discipline and poor performance in the workplace is not what it was. Under the headline "Death of the Bollocking", a mixture of managerial timidity, increasing bureaucracy, fear of litigation and general societal malaise (death of a competitive ethic etc) are cited as reasons for this.

Its main argument is that people need to know when their performance isn’t coming up to scratch and that, as stated in its sign-off paragraph, "… if you want a workplace where you don’t have to tick people off in the future, you may need to start bollocking them now."

I agree with much of what’s said, especially in relation to the contextual factors mentioned in the article. At the same time, I think it’s important for managers to see discipline in a broader sense than simply ‘telling people off’.

Employee engagement - With what?

Stephen Billing's post Leadership and Management Matter, Not Engagement Scores is the fourth in a series that he's 'penned' on what he sees as the ''cult of engagement''. In it, he summarises his main points as follows:

• high employee engagement does not cause high productivity
• engagement is becoming a cult and wise leaders will not pay much attention to it
• leaders should concentrate on business results and employee engagement is not a business result, it is an input.

The goal of raising employee engagement has become one of the 'taken-for-granteds' of organizational management - fuelled in large part by the ready availability of a multitude of questionnaires and surveys that purport to be able to measure it. But, as Billing argues, does this really make sense?

Paying for performance at the Olympics?

I was dismayed to read in yesterday’s Sunday Times that the British Olympic Association (BOA) is drawing up plans to pay bonuses to athletes who win medals at the 2012 Olympic Games in London (Team GB to be rewarded with gold for gold).

This is not to say that our athletes don’t deserve recognition for their sporting achievements and a generous reward for their efforts. Far from it. But advocating a crude form of performance-related pay as part of the strategy for securing more medals seems to me to miss the point on several levels:

High-expectations leadership – moving from vicious to virtuous circles

Some years ago, when I was a manager in a large industrial plant, we took the decision to scrap a whole raft of ‘performance measures’ and related practices that had been introduced some years earlier under the guise of productivity improvement and management control. Despite widely-held concerns that poor work practices would increase if controls were relaxed, we pushed on with the decision.

The reasoning was simple. If we were ever to unlock the vast wealth of untapped talent in the business, we needed to change the expectations that managers - throughout the organization - had of their staff.