ON THE FOLLY REWARDING A WHILE HOPING FOR B

1. ON THE FOLLY REWARDING A WHILE HOPING FOR B Author: Steven Kerr Presented by: Robert Montalvan

2. Steven Kerr PhD, City University of New York Goldman Sachs, Chief Learning Officer General Electric – Crotonville, Vice-president of Corporate Leadership Development The Ohio State University, Associate Professor of Organizational Behavior University of Michigan University of Southern California, Dean & Director of PhD program

3. “Managers who complain about lack of motivation of their workers might do well to consider the possibility that the reward systems they have installed are paying off for behavior other than what they are seeking” Steven Kerr Academy of Management Executive, 9(I), 1995

4. Goal displacement: “Goal displacement results when means become ends-in-themselves that displace the original goals”

5. EXAMPLES OF Goal displacement (1): Assume that the president of XYZ Corporation is confronted with the following alternatives: Spend $11 million for antipollution equipment to keep from poisoning fish in the river adjacent to the plant; or Do nothing, in violation of the law, and assume a one in ten chance of being caught, with a resultant $1 million fine plus the necessity of buying the equipment

6. EXAMPLES OF Goal displacement (2): World Bank claims repeatedly that its main goal is to fight poverty in the Third World. But in reality, to stay in office the World Bank must lend a great deal of money (23 billion) with no cheap interest

7. EXAMPLES OF Goal displacement (3): A Texas public school district have “cheated” by liberally exempt certain students to take standardized tests on the hope of raising overall district pass rates. John Bohte, Oakland University Kenneth Mier, Texas A&M University

8. Common management reward follies (1): Source: Steven Kerr

9. Common management reward follies (2): Source: Steven Kerr

10. Common management reward follies (3): Source: US Academy of Management

11. CAUSES OF FAULTY SYSTEMS: Fascination with “objective” criterion Overemphasis on highly visible behaviors Hypocrisy Emphasis on morality or equity rather than efficiency

12. Performance Systems:Mark Graham Brown (1996) “The most common mistake organizations make is measuring too many variables. The next most common mistake is measuring too few”

13. Pitfalls of measuring systems (1): Amassing too much data Focusing on short-term Failing to base business decisions on the data Dumbing the data Measuring too little Collecting inconsistent, conflicting and unnecessary data Driving the wrong performance

14. Pitfalls of measuring systems (2): Encouraging competition and discouraging team work Establishing unrealistic and/or unreasonable measures Failing to link measures Measuring progress too often or not often enough Ignoring the customer Asking the wrong question / looking in the wrong place Confusing the purpose of the performance management system

15. Performance management systems: High-involvement management is suppose to: Develop skills in employees Reinforce good performance Provide feedback Follow-up on unacceptable performance

16. Social Reinforcement Theory Social behavior results from situations and encounters that are either rewarded or punished as an individual matures from childhood to adulthood

17. Causes of follies: An inability to break out old ways of thinking about reward practices Lack of an overall system of performance factors and results Continuing focus on short term results by management and shareholders Partnering something in which we do not wholly believe

18. TYPES OF REWARDS: Extrinsic rewards: pay, promotion or fringe benefits. These rewards are mainly cash Intrinsic rewards: are part of he job itself. The responsibility, challenge and feedback characteristics of the job. Such rewards (non-cash) are more effective motivators

19. PERSONAL CHARASTERISTICS (need for achievement, age, education) OUTCOMES desire to remain intent to remain Attendance employee retention job performance JOB CHARASTERISTICS (task identity, optional interaction, feedback) ORGANIZATIONAL COMMITEMENT Hypothesized model of organizational commitment (Richards Steers – University of Oregon) : WORK EXPERIENCES (group attitudes, organizational dependability, personal import)

20. Common errors on performance management (1): Similar to me Positive leniency: want to give everyone higher scores Negative leniency: want to give everyone lower scores Halo effect: the employee is a “saint” so must have higher scores Attribution: tending to see poor performance as more of an influence of external factors Stereotyping

21. Common errors on performance management (2): Contrast effect: contrasting one employee’s accomplishments against another First impression Central tendency: forced bell curve (expecting in any group that there will be some poor employees and some great employees) Recent effect: over emphasis on recent performance Negative approach: catching them doing something wrong instead of catching them doing something right (Ohio University Performance Management System guidelines)

22. Manager/subordinate divergent goals and motives: Possible remedies: Selection of individuals that are consonant with the organization’s goals Training to alter those personal goals Altering the reward system

23. Advise: Next time that you are not getting the results that you want in your business, seriously evaluate what are you rewarding. You cannot get what you want until you stop “hoping for A while rewarding B”

24. Bibliography: Brayfield, Arthur & Crokett: Employee Attitudes and Employee Performance, Psychological Bulletin. 52(5), 1955 Bohte, John & Mier, Kenneth. Goal Displacement: Assesing the Motivation for Organizational Cheating. American Society for Public Administration, 2000 Department of Energy: Performance Management Handbook, 2001 Kerr, Steven: On the folly rewarding A, while hoping for B. Academy of Management Journal 18(4), 1975 <Original version> Lawler, Edward: Rewarding Excellence Steers, Richard: Antecedents and Outcomes of Organizational Commitment, Administrative Science Quarterly, 1977