Return on Intention

“You get better at what you measure,” or so it goes. Metrics are an important part of business. It allows us to focus on key areas and ensure that progress is being made. The good thing about good measurement is that it takes the guesswork out of improvement, and makes a more equal environment. If you notice an employee who is not doing a good job and you tell them, they will more than likely get angry and think you don’t like them. If you have a solid measurement system in place then you just show the employee the data. They can understand it and see the need to improve without a lot of emotion.

All this is well and good, but it does seem to raise one problem. We know that people are motivated by WIIFM (What’s In It For Me). You can’t motivate someone to care about something they just don’t care about. To solve this problem it has become common practice to use a bonus or reward system tied to a set of metrics. “If you can bring up production levels 10% by the end of the quarter, you will get a $500 bonus.” On the surface this tactic sounds good. It allows us to help motivate our employees to do better because if they do, they get a reward. It’s the carrot and the stick at work. Do good, get a carrot, do bad, get the stick!!! There are two evident problems with the carrot and the stick as we know it.

1.) It doesn’t matter what you measure, the better you get at something, the harder it is to get better. Lets say that you are measuring production of a product. You find out that you are running at about 20% of what you could be running at. You set up a system of measurement, create a reward structure, train and educate your workforce about the system and then get to work. In the first quarter, you get an increase to 30%. Everyone gets bonuses and everyone is happy. The next quarter you get to 50%. More bonuses are handed out and life is good. Then you go on to get 60%, 65% and then 70%. Then all of sudden your increases are now lucky to grow at 1 or 2%, if they grow at all. What Happened???

There is a certain amount of energy that takes place maintaining a position. Its a lot more work to stay at 70% than it did at 20%. This is predictable and can be planned for, but more often that not when the numbers stop growing at a rapid pace, many people get complacent again as they don’t seem to be making as much of an impact. It hard to get the troops worked up over 1%. How much of a bonus can you get for that extra 1%? Is the work required to maintain your position PLUS the amount of work to get even better worth that 1% bonus? This brings us to point number 2.

2.) The carrot and the stick deal with very shallow motivational tactics. Don’t get me wrong. Money isn’t everything, but stop paying your employee’s and see how many show up to volunteer. The problem is that the prospect of more money is a superficial motivator. Many people want to do a great job. Given the choice between work that is mediocre (or working for a company that is) and working for an industry leader, or at least a strong competitor at the head of the market, almost everyone wants the latter. It is also apparent that most people understand that good work done smartly is the key to a great company. The carrot and the stick relies too much on such a shallow premise that it can actually work to lower motivation.

There is a part in most of us that wants to succeed, and have a part on the winning team. The sense of satisfaction that comes from knowing we did important work for a winning team feels better to us than the satisfaction we get from an extra $50. By focusing on the money (the carrot) we degrade the mission to one of greed, and most people do not want to be seen as greedy, or to be thought of as someone who can be bought. The metrics we use and the processes that surround them should be used and presented as tools given to a skilled and valuable worker. They should not be presented as a “program” or “an initiative”. Rewards should still be given, but they should be done as a thank you in the background, and not the focus of a project. Let the business purpose stand out and be the purpose, not the prospect of a bonus. Let your employees have a deeper since of purpose by completing identified key objectives instead of chasing a carrot.

This entry was posted on Tuesday, September 11th, 2007 at 4:25 pm and is filed under Doin' it right, Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.