Imagine the following workplace scenarios:
1) In a manufacturing assembly line productivity (number of parts assembled per worker) seems to have suffered a serious decline.
Analysis: Bonuses were previously based on individual worker piecework (measured daily) and were changed to reflect total line output along with other company objectives that workers feel are in the hands of upper management (i.e., a company wide strategy to gain ISO 9000 certification). Rewards are now less directly tied to individual behavior by performance. Worker BUY-IN or OWNERSHIP (important concept in the workplace) to company goals (ISO 9000) to which their input has not genuinely been sought, may be low resulting in low commitment to the success of these goals. Still bonus/reward realignment may ultimately help achieve company goals, but behaviors will be affected.
2) The CEO of a large company notices that although overall profit margins and productivity are good, cooperation between the people in various divisions seems to have declined, in fact there seems to be animosity (e.g., in sharing company resources) where once was camraderie and cooperation. Some long-term company-wide objectives (ISO 9000 and Lean implementation) that require inter-division coordination seem to be suffering.
Analysis: The monthly bonus rewarding performance/goal achievement strictly by and within each division has replaced an annual bonus that was based on overall company performance and was evenly distributed between divisions and all employees. This has led to sometimes aggressive competition for shared resources between employees in different divisions.
3) A sales division not only seems to be suffering declining sales, but a few salespeople (former highly esteemed employees) have been disciplined or terminated for falsifying records (e.g., claiming contacts they have not made).
Analysis: Pay for salespeople was largely based on individual sales’ commission (the holy grail of compensation for top salespeople as my co-blogger Dennis might say). Changing compensation to a fixed salary (no-longer paying a commission to salespeople based on a percentage of their individual sales) was when the problems began.
4) The engineering division for a large company has received real gains in individual salary increases along with a record annual bonus, yet morale seems low and the grapevine has it that a few of the top engineers are looking for different jobs.
Analysis: This company’s product is highly engineered, the former company head came from engineering, and those in engineering have historically been feted as more or less saviors (well earned at certain challenging times in the product history). The current company head came out of human resources (seems to have little empathy for the engineering aspect of the business) and much of the engineering workload is being farmed out to satellite locations in India. Compensation is still a reward for these employees, but for some it doesn’t compete as a reward with recognition and a sense of self importance (in psychology we might refer to “self focus”) in a larger mission (the success of the company).
Now, are the above scenarios a bit contrived? Certainly, but not entirely unlike some real-life workplace events that I and many readers may have experienced. What do they all have in common? Rewards (reward contingencies) have changed and thus affected behaviors. Examples one and two demonstrate extremes between rewarding narrowly directed behaviors (individual or small group performance) and rewarding more globally directed behaviors (organizational performance). While example three emphasizes compensation as reward, example four demonstrates that non-monetary rewards can be important also.
My message is simple, organizational leaders and policy setters are responsible for much of individual and group behavior (desirable or not). The circumstances you contrive that act as rewards (and punishments) will likely influence work behaviors far more than individual dispositions. So, it is simply prudent to define what behavioral outcomes are desirable (based on business model, long or short term needs, etc.) and only then carefully designing or revamping organizational/individual reward systems (compensation, rules, policies, etc.). In future posts more discussion of behavior shaping, rewards, and reward schedules. But in the next post I want to explain why I focus on workplace behavior.
