What gets rewarded, gets repeated.

It is pointless to work without targets or standards. I think it breeds belligerent clock watchers. Employees need some degree of accountability.  But it is also dangerous to set targets that breed destructive behaviors, such as greed, dishonesty and the price-gouging of customers.

And this is always a challenge – How do you set up fair but inspiring reward systems? How do you decide who gets what and who gets promoted?  Every time a company hands someone a discretionary payment, they are saying ‘well done,’ and every time there is a promotion, the organization is signaling that this person’s standards are acceptable and normal.

Putting human beings on an equal footing, no matter their effort, is also demoralizing and is not a solution. Human beings will then bring their efforts into line with the lowest common denominator. Most of us will not be happy to be ignored for going the extra mile for very long. We have always had to look out for ourselves in order to survive. What’s in it for me? is still the biggest question swirling in our minds when we consider whether and where to invest our energy.  

There needs to be some way of knowing the good performers from the mediocre and under par, the wheat from the chaff, but we are emotional creatures and when it comes to deciding between who is doing a good job and who is not, we may be prone to bias. We may not be clear sighted when we look at real outputs. We may place emphasis on the wrong results. It happens.  A system that only looks at hard measures, may completely ignore other critical behaviors in a workplace, such as quality, innovation, moral courage, clear thinking, decisiveness, kindness and steadiness of character.

How reliable are hard measures? What about profit? An employee asked me why he didn’t receive a larger bonus than his contemporaries, since he had worked on profitable projects and ‘some of them have worked on losers!’ It almost sounds logical until you consider the long-term effect of following his train of thought. He was correct in stating that his last projects were money makers, but he was a guy who never valued anyone else’s contributions on those projects. He took all the credit. He wanted to punish his colleagues for the loss makers they slogged away on to complete. Is that fair? If we followed his rationale for bonuses, how would we ever persuade good employees to apply themselves to a project that was in trouble? Why agree to the assignment if you know you will face financial punishment.

What happens when we try to value ‘effort’ – a more intangible workplace quality? Managers can easily be swayed by drama and busyness and panic merchants. I have seen it too often. And the reverse can occur; the cool and collected can be punished for being ‘too casual.’ A colleague once insisted that her assistant was worth a bigger raise that anyone else’s. Why? “Because she often works late.” This was true. Her assistant often worked later because my colleague was a terrible time manager and left everything to the last minute. The assistant stayed back to sort out the mess.  The assistant got the bigger pay raise. My colleague’s behavior was not addressed. The other assistants were demoralized, not surprisingly and it was a bad day for the competent planners.  

It is no simple thing to get this right. Whenever you decide what outcomes deserve reward, you have to consider what could be neglected in that pursuit, because rational people will align their efforts in the direction of the rewards. They are not stupid. If I am only rewarded for my individual results, you can probably forget my interest in teamwork. If I am rewarded for finishing a project on time, I might not care about the short cuts I take to beat the clock. If you furnish me with a special bonus for keeping safety incidents low, don’t expect me to report them all or even notice them. Willful blindness just might take over.

The setting of objectives that are tied to rewards is not just a problem for business. The fallout can affect everyone. Schools can and do turn away children that they assume will drag down their metrics if they are ‘paid for performance’. I have lived through this in the UK and can attest to the cruelty of such systems, designed to reward grades, which then become suspiciously positive. Children with any hint of a special need, is rejected. A colleague recently told me about Sydney schools that are encouraging some students to stay home on the days of basic skills testing, so as not to damage their ratings. Because ratings go into newspapers and schools want to attract parents with deep pockets.      

Many of us have grown tired of the expression “what gets measured gets done.”  Not everything that is measured or measurable is valuable.  Or to put it another way, not everything that can be counted counts, and not everything that counts can be counted. We take enormous risks if we do not set targets with great care and do some critical thinking about the unintended consequences that can impact us all.  

But failing to set any targets or establish rewards at all, is not an option.