Observing the current U.S. presidential campaign has me thinking about Steven Kerr’s classic article, On the Folly of Rewarding A, While Hoping for B, which many have summarized as “it’s the reward system, stupid!” In the article Kerr provides examples of reward systems spanning from politics to sports to organizational life “that are fouled up in that the types of behavior rewarded are those which the rewarder is trying to discourage, while the behavior desired is not being rewarded at all.” Although our organizations are hopefully not embroiled in the level of chaos we are witnessing in the current political system, we are nevertheless equally affected by misdirected reward programs created to achieve one outcome while producing another unintended outcome.
See if you can recognize any of these “common management reward follies” that Kerr identified at play in your organization:
Given the 70+% failure rate of major organizational change – a sobering statistic that hasn’t improved in the last 30 years - it makes sense to ask whether how we reward those in charge of change may be in part a root cause. Assessing the impact of reward systems on leading change is often an instructive exercise for change agents in our quest to align goals, outcomes, contribution and consequences: indeed, doing so is a mission-critical task for Change Intelligent leaders and organizations.
Kerr points to two explanations for “why fouled-up reward systems are so prevalent”:
1. “Fascination with an ‘Objective’ Criterion. Many managers seek to establish simple, quantifiable standards against which to measure and reward performance. Such efforts may be successful in highly predictable areas within an organization, but are likely to cause goal displacement when applied anywhere else.”
What’s more unpredictable than a journey through the unknown territory of organizational change? Ask yourself:
- When it comes to leading change, what are we rewarding in our organization? Results? Or results plus relationships that yield results?
- Do we truly reward innovative thinking and agile acting? Or is that our rhetoric, but our reality is that we reward consistent performance measured by status quo criteria?
- Do our reward systems encourage making decisions that benefit the entire enterprise, or siloed subunits?
- Are leaders applying quick-fixes for short-term gain – or building transformational capacity for the long-term?”
2. “Overemphasis on Highly Visible Behaviors. Difficulties often stem from the fact that some parts of the task are highly visible while other parts are not. For example, [in sports] scoring baskets and hitting home runs are more readily observable than feeding teammates and advancing base runners.”
What’s harder to observe than the political and emotional undercurrents surging in the sea of change? Ask yourself:
- How are our leaders fostering a culture for change? Do we reward intelligent risk-taking, or “only” bottom-line metrics?
- What’s our employee experience of change within our organization? Do people feel they have the resources and the empowerment to work in bold new ways?
- Are we building inclusive teams and soliciting diverse perspectives, to yield new and creative solutions? Or do we revert to the tried-and-true during challenging times, closing ourselves off from dissimilar voices, staying locked in outmoded paradigms?
By asking these questions, Change Intelligent leaders facilitate courageous conversations, challenging the organizations they serve to ensure their reward systems are aligned with their espoused values and mission, greatly enhancing the probability of individual and collective goal attainment – and successful and sustainable change.
Reference: Kerr, Steven, On the Folly of Rewarding A, While Hoping for B. Academy of Management Executive, 1995, Vol. 9, No. 1.