Rewards Will Reinforce Behavior—Good or Bad

Chapter 6 Pg’s 149-151 Lead With Love By : Gerry Czarnecki

Organizations do elicit the behavior they reward, whether the behavior is good or bad. Contain the negative impacts by making certain your rewards, explicit and implicit, are focused on the behavior you view as good. Let’s consider a few simple examples. Imagine an organization with an incentive system that rewards the sales and marketing departments by paying a flat commission on all sales over $1,000. The range of pricing for the products is $500–$25,000. Let us also assume the profit on a $25,000 item is thirty times greater than the profit on a $1,000 item. Obviously, the company would like the sales force to sell as many large-ticket items as possible since they generate more profits with those items.

 Although the incentive structure encourages sales over $1,000, we can be fairly certain the staff will not pay much attention to selling items with a higher profit margin since the incentive offers no extra reward to them and $1,000 sales are likely easier. The company encourages sales but not the ones it really wants. In another case, we can look at a company with an open-door policy for employees. Let’s assume employees are told that if they have a problem with their supervisor they always have the right, and indeed are encouraged, to take the issue to the next higher level of management. Many very fine companies have such policies, and they can be quite effective at giving employees meaningful “escape valves” for legitimate supervisory problems. In this example, the company has had this policy for three years, and it seems to be working to everybody’s satisfaction, except in one department. In this department, several supervisors have complained to the human resources department about the policy, saying it substantially undercuts their ability to manage. The director of human resources is concerned and conducts an investigation.

 He finds there are ten times as many complaints in that department. On further investigation, he discovers that when the department manager receives a complaint, he always overrules the supervisor. In other words, the complaint is always resolved in the employee’s favor. It is possible every supervisor in that department has a leadership problem; however, it is more likely the manager has created the problem because he rewards each complaining employee by always agreeing with the complaint. Over time, employees in his department have realized that if they complain, they get their way; therefore, they should always complain. As you can tell in each of these examples, it does not take long for associates to “break the code.” In the first instance, they figure out how to make the most money, and they use the easiest way to do that. In the second instance, they conclude they can have anything they want just by filing a complaint up the chain of command. The organizations elicited the behavior they rewarded. The only problem was it was undesired behavior. Ironically, the second example is the most frequent mistake leaders make. In the first instance, most organizations put serious thought into such an incentive plan, and it will, in all likelihood, be adjusted to encourage high-profit sales long before it is implemented. In the second instance, the policy probably has safeguards built in, but its execution is a leadership responsibility. The manager is rewarding undesired behavior in spite of a sound policy. Leaders do this very often without recognizing the impact.

We do it when we allow an unsatisfactory employee to continue in a job long past the time we should have taken adverse action. We do it when we promote the wrong person. We do it when we allow a person to come in late almost every day without any disciplinary action. In each of these circumstances, we reward the wrong behavior by allowing it to continue. All associates get the message, and they will begin to exhibit the undesired behavior. Like it or not, all of our decisions are on stage. For example, if your associates see promotions based on personal charisma of people whom they know to be lazy, they will conclude that the way to success is to be a nice person who goes home early. Much sooner than you might expect, you will see your entire staff race to the door at 4:30 p.m. every day. It is important to give rewards for the right behavior with the right associates. Norm Augustine, author of the classic book Augustine’s Laws, tells it this way: “Recognition of accomplishment (and the lack thereof ) is an essential form of feedback. To reward poor performance or neglect outstanding performance is like placing the controls for each separate half of an electric blanket on the wrong side of the bed. Think about it.” If you do, it will be clear that such a leader is sending all the wrong signals to all the associates.

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