// performance and work

As cited in the Corporate Leadership Council’s report Contrarian Thinking on the Impact of Pay for Performance: The authors of a recent McKinsey Quarterly article argue that strong performance-based incentives may motivate employees to focus exclusively on current business objectives, potentially undermining employees' identification and development of new business ideas to fuel future growth. The authors observe that, given the relative ease of measuring current employee performance, organizations typically offer more substantial incentives for performance against current goals and weaker incentives for fostering innovative ideas, thereby encouraging employees to deemphasize a longer-term focus. The authors suggest that firms should instead balance incentives for current performance and future-facing objectives.

The Council's 2002 quantitative analysis of performance management strategies, Building the High-Performance Workforce, suggests an additional cautionary note on performance-based pay, finding that sizeable financial rewards often have a smaller-than-anticipated impact on employee performance.

"(S)imply put, the learning profession has done a por job of building core competencies in quantifying the financial value and impact of most performance improvement effort" (Taylor, 2002).

52% of all innovative projects fail and 31% percent of these projects are canceled before producing a single deliverable (Kapur, 1997).

More than half of top management-driven “corporate transformation” projects do not survive the initial phases (Senge et. al., 1999).

According to respected business consultant and author Jim Collins, “A company can fundamentally change what it is… The flip side is that we found only 11 out of 1435 companies that had done it” (Cone, 2002).

In a review of re-engineering efforts implemented at nearly 3,000 hospitals, 88 percent realized no significant benefits. However, the remaining 12 percent achieved a 10% cost improvement (Walston, Bogue and Schwartz, 1999).

According to re-engineering guru Michael Hammer, "(W)inning does not depend on a clever plan or hot concept. It depends on how regular, mundane, basic work is carried out… Relentless operational innovation is the only way to establish a lasting advantage."

"Deviance is the source of all innovation… (it) always manifest itself first on the Fringe, where the lone deviant is the only one interested in communicating it" (Matthews and Wacker, 2002).

"When the going gets weird, the weird turn pro." – Hunter S. Thompson


// technology

"On average, professional coders make 100 to 150 errors in every thousand lines of code they write, according to a multiyear study of 13,000 programs by Humphrey of Carnegie Mellon" and although "(s)ystems testing goes on for about half the process… and even when they finally get it to work, there’s still no design" (Mann, 2002).

"In the last 15 years alone, software defects have wrecked a ($500 billion) European satellite launch, delayed the opening of the hugely expensive Denver airport for a year, destroyed a NASA Mars mission, killed four marines in a helicopter crash, induced a U.S. Navy ship to destroy a civilian airliner and shut down ambulance systems in London, leading to as many as 30 deaths" while the I Love You virus enabled by Microsoft’s decision to allow Outlook to easily run programs in e-mail attachments cost $8.74 billion according to consulting firm Computer Economics (Mann, 2002).

"According to a study by the Standish Group… software projects often devote 80 percent of their budgets to repairing flaws they themselves produced—a figure that does not include the even more costly process of furnishing product support and development patches for problems found after the release" (Mann, 2002).


// communities

"All business problems are, in fact, cultural problems" (Matthews and Wacker, 2002).

According to Nancy Etcoff, clinical instructor in psychology at Harvard Medical School, "By 2020, depression is predicted to be second only to ischemic heart disease as the world’s leading cause of disability" (page 80 of the June 2002 issue of Wired).

Employees who have better interpersonal relationships are more efficient that teams of uncooperative workers who with superior technical skills (Fest, 2001).

Research lead by Roy F. Baumeister, Ph.D., of Case Western Reserve University, demonstrates that “interpersonal rejection can dramatically reduce the capacity for intelligent thought, raising the possibility that reasoning skills evolved to help us navigate the complexities of social life rather than help us solve technical problems” (Poultney, 2002).

Findings from a related study, led by Jean M. Twenge, Ph.D., of San Diego State University in California, suggest that "socially excluded individuals are so busy trying to suppress emotional distress that they are unable to engage in controlled thinking, leaving only automatic processes unaffected" (Poultney, 2002).

"Emotional intelligence gives you a competitive edge. Even at Bell Labs, where everyone is smart, studies find that the most valued and productive engineers are those with the traits of emotional intelligence -- not necessarily the highest IQ" (Goleman, 1995).

Research at Emory University demonstrates that dopamine levels tend to increase in individuals participating in cooperative behavior. This suggests that humans are naturally predisposed towards cooperative behavior (Rilling, et. al., 2002).

Researchers from the U.S. Department of Energy's Brookhaven National Laboratory, the State University of New York at Stony Brook and the University of Pennsylvania School of Medicine have found reduction in dopamine receptors in the brain that may underlie the cognitive deterioration (particularly regarding attention span, impulse control and mood) associated with aging (January 2000 issue of The American Journal of Psychiatry).


// motivation

"Real achievement means inevitably a worthy and virtuous task. To do some idiotic job very well is certainly not real achievement" (Maslow, 1998).

Miller (1973) describes all five approaches to religion (as viewed through the lens of a level in Maslow's hierarchy of needs) are "legitimate, but each will seem ridiculous when viewed from above or sterile when viewed from below" (Miller, 1973).

Psychological researcher Frederick Herzberg (cited in Accel-Team, 2001) refers to traditional carrot-and-stick motivational approaches as KITA (short for "kick in the pants"). Herzberg’s research showed that these methods do not work except in short-term situations and are detrimental to the relationships between managers and employees and to the relationships between “star” performers and non-rewarded peers. As Alfie Kohn remarked, "Between the legendary carrot and the stick stands a jackass" (cited in Scholtes, 1998).

Herzberg observed that "the things people said positively about their job experiences were not the opposite of what they said negatively about their job experiences; the reverse of the factors that seemed to make people happy in jobs did not make them unhappy." As a result, he distinguished between hygiene (factors which if not sufficiently present result in negative impacts to performance) and motivators (factors which positively impact performance).

Overall, Herzberg found that the primary motivator for most people is the work itself while the primary hygiene factors are the way people are treated (cited in Ratzburg, 1971). In other words, if an employee’s talents, interests and goals are consistent with the work that he or she does, he or she is likely to be happy and productive. This alignment of personal welfare with work performed is more predictive of an employee’s success than his or her receipt of rewards or incentives.

Findings of more than 130 research studies suggest that people with an internal locus of control perform better at work, exhibit more initiative, are more cognitively active, are more eager to learn, respond to failure in more appropriate ways and more successful than those with an external locus of control (Laborde, 2001).


// 360 feedback

While nearly 60% of all U.S.-based companies of 500+ employees utilize some form of 360-degree feedback, an ongoing study of 750 large, public companies found that 360-degree feedback programs were associated with a 10.6 percent decrease in shareholder value (Pfau et. al., 2002).

Another recent survey demonstrates that 50% feel the processes are expensive and time-consuming and 45% felt that raters were too threatened to provide honest feedback through these processes. Feedback often leads to reduced performance even if the feedback is positive. Comparative data (relative to peers) often leads to particularly difficult situations (Corporate Leadership Council, 2002).

The failure of 360-degree feedback may lie not in the feedback itself but in the utilization of that feedback. A recent study conducted by McKinsey questions the effectiveness of pay-for-performance strategies and suggests that these methods often weaken employee focus on long-range goals, innovation and exploration.

"When overloaded with work or life responsibilities, people are sometimes unable to take in disturbing feedback and become defensive… Someone with low emotional intelligence and problems getting along with others isn’t likely to get feedback in the course of everyday life… People who feel victimized by feedback are more likely to spread their negativity to those they believe are responsible." (Wimer, 2002).

Kruger and Dunning (1999) found that incompetent people assessed themselves as being highly competent. This lack of ability to self-assess may be due to a combination of internal (poor metacognition) and external factors (poor ability to compare oneself to others).

The bottom line: 360-degree feedback strategies are not a panacea; some individuals will be thrilled with the process and benefit greatly while others will see only negative results. Therefore, it is important to avoid “all-or-nothing” decisions regarding the implementation and continuation of these programs. The most important key to success in using performance management strategies to drive business results is the ability to effectively evaluate, customize and reinforce methods that benefit unique needs of individuals.


// references

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