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Tag Archives: Pay for Performance

Death By Incentive Program

04 Monday May 2015

Posted by Paul Kiser in Business, Customer Relations, Customer Service, Education, Employee Retention, Ethics, Honor, Human Resources, Management Practices, parenting, Public Image, Public Relations, Re-Imagine!, Relationships, Respect

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Tags

evaluation, incentive programs, office, Pay for Performance, reward, school

_DSC0363 (2)Incentive programs are the tip of the sword in organizational suicide. They are often designed by people who believe that there is a single cause leading to a positive effect in achievement. The reality is that life isn’t that simple. Here are three examples of incentive program fails:

EXAMPLE 1 – Retaining Major Customers
ISSUE:  A business owner loses a major customer and believes that it was because his employees weren’t responsive enough to the major customer’s needs.

INCENTIVE:  The owner creates and incentive program that rewards employees for being more attentive to major customers. (Potential measures:  Major customer satisfaction surveys, increase in revenue from major customers, response time data.)

EFFECT: Some employees learn how to gain the favor of the major customer through unethical tactics:  i.e. kickbacks, access to inside information about the major customer’s competition, sacrificing minor customers in order to be more attentive to major customers, giving more product or service to the major customers and charging it to minor customers, etc.

RESULT:  The owner finds out that some unethical employees look like superstars to the major customers, while ethical employees seem to be failures. Minor customers, a primary source of new revenue, leave for competitors leaving the company with a few major customers that demand special treatment.

EXAMPLE 2 – Improving Student Performance
ISSUE:  Recognizing and reinforcing good student behavior and educational achievement.

INCENTIVE:  Teachers are given special reward tokens to give to students who display good behavior, or who perform exceptionally on class or homework assignments. Students with the most tokens are given a special reward at the end of the school year.

EFFECT:  Some teachers give out tokens liberally and gain favor with the students. Some teachers attempt to ethically administer the program, but find that they are not consistent in giving out tokens to the students for similar positive events. Some teachers do not buy into the incentive program and rarely give out tokens.

RESULT:  High performing students discover that their behavior and achievements is subject to different evaluators who create an reward system that is not objective. Students who are recognized feel superior to other students, and other high performing students become angry, frustrated, and discouraged.

EXAMPLE 3 – Improving Productivity
ISSUE:  Motivate management to improve to eliminate wasted time and resources.

INCENTIVE:  Financial bonuses for top managers who have higher output per employee and/or expenses, OR have lower cost per dollar of revenue.

EFFECT:  Managers discover that by making salaried employees work longer hours and not replacing old equipment as needed, they can look more productive. Employees may not like working with broken or outdated equipment, or be required to work longer hours, but that is not what is measured, so it is irrelevant to the manager.

RESULT:  Other indicators (high turnover, loss of customers, etc.) might indicate a failure of the manager in performing his or her duty; however, because the incentive is to improve productivity, those factors are ignored. The manager looks like a superstar and yet the division or department has severe morale issues and is a business failure._DSC0361 (2)

Why Incentive Programs Fail
Despite the popular idea that incentive programs are a good motivational tool, there are four reasons why they are not.

Organizational success is not a science, but an art

Incentive plans are based on the old idea that the ends justify the means. True organizational success is all about the ‘means’ and the success comes only after multiple factors combine. Organizational success often can’t be repeated because it was contingent on the talents of key team members who brought key talents or skills into the formula of success.

Cause and effect are rarely in a one-to-one relationship

Whatever is defined as the positive outcome, people will find multiple ways to achieve the desired goal, regardless of ethics.

People are not ethical by nature

Incentive programs encourage unethical behavior. The goal is assumed to be the highest priority and that is tacit approval to some that anything goes as long as the goal is met or exceeded.

Some organizations intend the incentive program to encourage unethical behavior

Executives cannot tell their employees to be unethical, but they can create the environment that fosters unethical behavior in pursuit of the indicators of success. This protects the company and puts all the risk on the employees.

Incentive = Manipulation

People who design incentive programs explain that the intent is to reward good behavior, and they fail to complete the sentence, “through manipulation.” Manipulation requires a lack of respect. Most people want to do the right thing and don’t need to be tricked into doing it. It is possible that unethical behavior is stimulated by incentive programs because the person feels disrespected by the use of manipulation and responds by obtaining the reward while sabotaging the program.

The Need For An Incentive Program?
Organizations that need an incentive program indicate a failure in leadership. Any business or school should know who its best performers without an artificial measurement program in place to identify them. In addition, any organization should have an ongoing effort to recognize and reward the best performers. Leadership that is effective in celebrating success will be setting the example for others without manipulation through an artificial program that disrespects people and will likely be vulnerable to unfair evaluation and unethical behavior.

10 Things To Decline From An Employer

09 Monday Dec 2013

Posted by Paul Kiser in Business, Communication, Customer Relations, Customer Service, Employee Retention, Ethics, Health, Honor, Human Resources, Information Technology, Internet, Management Practices, Pride, Privacy, Public Relations, Re-Imagine!, Relationships, Respect, Social Interactive Media (SIM), Social Media Relations, Technology, Tom Peters

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Affordable Care Act, benefits, company car, company cell phone, company email, Email, employment agreement, employment contract, free speech, Heath Benefits, Intellectual property, NDA, Non-compete, Pay for Performance, retirement benefits

No longer can anyone expect to build a lifelong career with one organization, nor is that considered healthy for the individual or the company. A person is now his or her own commodity. He or she must expect to build their own skills and reputation as an individual on the open market rather than as corporate employee number 8675309.

In this Brave New Working World a person should be prepared to say ‘no’ to antiquated elements of 20th Century employment, not only because they are inappropriate, but because they indicate that employer is unaware of their failure to be competitive in the 21st Century. Benefits and perks that were meant to tie a person to one organization no longer make sense in a world where ‘permanent employee’ has been replaced by ‘contract labor.’

Here are ten employment offers and requests that should be declined from an employer and cause you to re-evaluate your working relationship with a company:

No. 10 – Retirement Benefits
It should be obvious that any company offering retirement benefits either does not understand today’s working world or is trying to offer something that they know you will never receive. Better to have the money now and invest than pretend you’ll still be with the company when you retire.

The Company Email is always the company's to give or take away

The company giveth and taketh away access to your email

No. 9 – The Company Email Account
You many have to use the company email when corresponding with others in the company, but always ask yourself, “If the company decided to lay me off today and they ended my access to my email account, what information would I lose?” What about that email from the senior executive that ordered you to overcharge your customer? Every email sent to your company email account should be forwarded to a private account and blind copy any company emails you send to your private account. This protects you and the company from the unethical corporate manager.

No. 8 – The Company Car
When I was growing up my uncle worked for an oil tool business and he had a company car. I thought that was the coolest perk in the world. While it is a rare perk in today’s world, it should be declined in most situations. The problem with the full-time company car is that it becomes a liability if a better employment opportunity arises. Suddenly you’re faced with buying a new car in order to accept a better job.

The company cell phone comes with chains attached

The company cell phone comes with chains attached

No. 7 – The Company Cell Phone
Many people fail to realize what a company cell phone represents. It is a chain that ties the employee to the employer 24/7/365. A boss may hesitate to call a private cell phone, but have no problem calling the phone they are paying for at 3 AM. Many jobs require an employee to be accessible, but you are better off with your own phone than be indentured by a company cell phone.

No. 6 – Giving Your Employer Your Social Media Passwords
There are questions as to whether it is legal for an employer to demand an employee’s passwords to his or her Facebook, Twitter, and other Social Media passwords. The bottom line is that you do not want to work for a company that wants this level of control on your life. It will only go downhill from there.

No 5 – Restricting Free Speech (The NDA)
In an exercise with students in a graduate program, I purchased the fictional company they worked for and I was interviewing them to determine who to keep and who to let go. As part of this exercise I gave each of them an outrageous NDA contract (see Kco NDA) to sign. In almost every case, the Master’s program students signed it, most without question.

A company’s has a right to protect its reputation, but employers should be under the burden to gain the loyalty, trust, and respect of their employees so that they would not dream of talking smack about their workplace. If an employee is ready to bad mouth the source of their income then either the employer hired the wrong person, or the employer has failed to treat their employee as an important asset. In either case, it is the employer, not the employee who shoulders the burden of the failure.

No. 4 – Intellectual Property
If you have been consigned to produce something tangible for someone, then you have agreed to surrender it once it has been created and delivered; however, many companies are claiming ownership of any work done by an employee as their own intellectual property. Nothing could be more disrespectful to a human than to treat them as a machine that is only useful as a tree from which they pick and enjoy the fruit. A business that values their team would never have to be concerned about the issue of intellectual property because each team member’s work would be a source of pride and celebration. The important element in any organization is the person who creates the work, not the work itself.

Before you sign away your right to maintain ownership of your work you should ask if you want your give away your legacy of achievement to those who didn’t do the work?

The Affordable Care Act is emancipation for the worker

The Affordable Care Act is emancipation for the worker

No. 3 – Health Benefits
America has millions of people who continue to work for an employer primarily because they need or want the health insurance offered by the company. As an employer do you want people to only be working for you because of the health benefit perk?

The biggest impact that the Affordable Care Act will have on America is to free people to work for people they want to work for, not those who have the critical health care benefit he or she needs.

No. 2 – Pay For Performance
When someone attempts to quantify a job or project they sacrifice common sense for greed. The need to meet the measured goals forces an employee to ignore important aspects of work that can’t be measured or quantified. Pay For Performance assumes the Ends always justifies the Means, which is rarely true in the business world, despite what greedy executives and investors think. Almost always customer satisfaction is at risk under Pay For Performance standards because a customers true satisfaction cannot be measured by questionnaires, surveys, nor sales. In every case the wise employee will figure out how to exploit the system and defeat the true purpose of the evaluation tool.

Pay For Performance systems are lose-lose scenarios for everyone and a company that relies on them does not understand how to truly motivate and reward its team; therefore, you should avoid the trap they are setting for you, your customers, and themselves.

No. 1 – The NCA
The non-compete agreement or NCA is the one indicator that proves only fools work for the employer, and there are plenty of fools out there. You shouldn’t be one of them. 

An NCA basically eviscerates your career by not allowing you to continue working if you leave the current company. In today’s world that can be a death sentence. Your skills and experience are laid to waste by an NCA and you should never agree to it, nor should you consider working for someone who asks you to sign one.

Is It Time For A Two-Tiered School System?

12 Tuesday Mar 2013

Posted by Paul Kiser in Education, Ethics, Government, Management Practices, Opinion, parenting, Politics, Relationships, Respect, Taxes

≈ 2 Comments

Tags

elementary education, Parent Development, parent involvement in school, parents, Pay for Performance, schools, secondary education, teachers

Image by Paul KiserThere is a major problem in America’s educational system and that problem is obvious to anyone who spends time in the classroom. Consider this scenario:

Student X is one of the youngest in the class and started the year slightly behind (academically) her older classmates. Student X lives in a moderate, stable family environment with a modest income. The parents of Student X volunteer at the school and her Mom helps in the classroom once a week. Student X is expected to do her homework soon after coming home from school. One of the parents of Student X is available while she does her homework to answer her questions and assist her as needed, but the parent does not give her the answers. Her parents are in regular contact with her teachers and stay aware of her strengths and weakness. Student X receives constant encouragement to focus on learning.

Student Y lives in a two parent environment; however, one of the parents works 60 to 80 hours a week. Student Y is involved in a variety of non-school activities that take up several hours of after school time. One parent tends to be the mode of transportation from activity to activity, but doesn’t always wait for Student Y. Homework for Student Y is a ‘if we have time” priority, and Student Y’s parents have little contact with the school. Student Y’s parents are never sure what to expect on his report card and are often caught be surprise when there is an issue with a grade.

The absent parent in a child's education cannot be replaced by all the computers in the world.

The absent parent in a child’s education cannot be replaced by all the computers in the world.

Which student do you think will do well on a Standardized Test? Which will student has a better chance to succeed?

The fact that is often overlooked when discussing America’s public schools is the role that parents play, or fail to play in their child’s education. This is not a ‘blame’ issue, but it is a reality that must be included when politicians discuss how they want to ‘fix’ our schools. Parent investment in their child’s education is vital for her or his success in learning. Parents who, for whatever reason, fail to be committed to support and promote learning at home risk destroying the commitment their child will have in the classroom.

So the question is whether or not we need a two-tiered school system based on the parent’s commitment(†) to their child’s education. I believe that most good teachers can tell which students have committed parents, and which do not, so dividing students into two groups should be easy to accomplish.

Several studies have identified the advantages a student with involved parents has over a student who does not.(¹)(²)(³) In addition, a lack of parent involvement may require additional resources from the school to take up the slack of the parent who is not invested. If a teacher has to spend extra time to help that student who didn’t do their homework and master the needed skill, then the rest of the students pay the price because they can’t move forward until Student Y catches up. Even a child who is academically behind is less of a burden on the school when their parent is actively invested in the school.

Dividing our schools based on parental involvement makes sense…on paper, but like all quick fixes there are problems created by the fix that negate it. Identifying students with absent parents avoids the real problem, which is making parents aware that their investment in education is vital for their child’s success.

A Parent’s Place in Education
Despite the need for parental involvement, there is a limit to a parent’s engagement in their child’s education. Unless a parent also has a degree in education, the teacher is the most qualified to take the lead in the classroom. Parents should see themselves as interns in the school.

Even in fundraising, the parent’s role should be subservient to the school and its staff. Parents who decide for the school what projects and programs should be funded risk interfering with the objectives established by those who have an understanding of the larger view.

This should not cause a parent to wait to be asked to become involved. School administrators and teachers focus should be on the students, not on directing parents. This requires that parents and the school create an environment of trust and respect that is facilitated by timely and effective communication.

Professional Development for Parents?
One problem that faces parents is that most of us are not trained in the skills of helping a person learn. In addition, parents may not understand the objectives of the teacher; therefore, they may not know how they can support the in-class work when the student is working at home.

Schools are financially strapped for resources, but if politicians really want to help our educational system, maybe they should consider how schools can pay for parent development seminars (and/or webinars) that will support the objectives of the teachers and the school. By improving the at-home learning environment politicians might actually take a big step in ‘fixing’ our public schools.

We may not need a two-tiered school system, but we certainly need to accept that the failure of a student in school may indicate the failure of a parent, not the teacher or the school.

†(I was reminded this week about the difference between someone who is involved and someone who is committed. If you’re eating a bacon and egg breakfast, the chicken was involved, but the pig was committed.)

Standardized Testing is Not the Solution in American Education

09 Saturday Mar 2013

Posted by Paul Kiser in College, Education, Ethics, Government, Higher Education, Opinion, parenting, Politics, Universities

≈ 5 Comments

Tags

Nevada, Nevada Schools, No Child Left Behind, NSHE, Pay for Performance, Reno, schools, standardized tests, student performance, teachers, Washoe County School District, WCSD

Most of the political discussions about America’s failing education system do two things. First, they blame someone, usually the teachers, and second, they seek simple-minded solutions that assume all children are developmentally equal and live in the same socioeconomic environment.

If education were only about what can be scored on a test, then we don’t need teachers, we need mind programmers

No Child Left Behind was based on the belief that a standard test would be the ultimate measure of a student’s success or failure. The assumption was that if student’s scores on a standardized test failed to achieve established goals then we could all blame the teachers and administrative staff, then punish them. The concept assumed that a student’s base level abilities, and parental support was irrelevant. No Child Left Behind was an idea that applied a corporate-like measurement system, which often fails in a business environment, and forced public schools to leave education behind in pursuit of goals that reduced students to do or die numbers.

The failure of No Child Left Behind is so spectacular that after a decade the program began, over two-thirds of the States are ranked at a “D” or “F” in the quality of education by StudentsFirst.org Report Card. 

Standardized tests assume that every child is an X, but in reality they are A to Z

Standardized tests assume that every child is an X, but in reality they can be A to Z

One of the major failures of the program was the institutionalizing of testing standards that encouraged teachers to focus on teaching their students how to successfully take the tests, but not to understand the material. The program ultimately forced out many excellent teachers that rejected the absurdity of No Child Left Behind, which is ironic because the goal was to force out less effective teachers. The result has been that school after school has failed to produce the results desired leaving America with a generation of students who are even less prepared for adult life.

Nevada’s Washoe County School District (WCSD) is typical of many school districts across the United States. For the 2010-11 school year the standardized tests indicated that an average of 85% of the high school students (9th-12th grades) met or exceeded the established standards for reading, writing, and math. Those scores would indicate that 85% of the students are prepared to move on from high school.

However, of the 1,600 Washoe County School District graduates that attended Nevada state-run universities, almost half (48%) of them required remedial classes to bring them up to college entrance-level work. The standardized tests are designed to measure competency; however, even though the scores indicate the students are prepared, almost 1 out of 2 need to take classes to address educational deficiencies.

Some might say this just confirms the inadequacy of public schools; however, if that were true the standardized tests should reflect those failures and they do not. It is the inadequacy of the standardized test to measure educational performance or lack of performance.  

Standardized tests can be an effective tool in education, but they are just one tool. If we truly want to improve the educational performance of America’s students we must stop holding a knife to the throat of teachers and schools and stop using simple-minded measurements of academic performance to determine whether they live or die. A teacher can’t be held accountable for a parent that doesn’t believe in homework, therefore causing the student to be behind the rest of her/his class. It’s time we began supporting the teachers who have years of training and experience in education, rather than applying failed business models that destroy public education.

Pay It Middle: The Balance between Too Much and Too Little Compensation

01 Tuesday Jun 2010

Posted by Paul Kiser in 2020 Enterprise Technologies, Communication, Consulting, Customer Relations, Customer Service, Employee Retention, Human Resources, Lessons of Life, Management Practices, Public Relations, Relationships, Rotary, Science, Social Media Relations, Violence in the Workplace, Women

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Tags

Abraham Maslow, Blogs, Compensation, Employment, HR, Management Practices, Maslow's Hierarchy of Needs, New Business World, Pay for Performance, performance reviews, Public Image, Re-Imagine!, Rotary

by Paul Kiser [Twitter: ] [Facebook] [LinkedIn] [Skype: kiserrotary or 775.624.5679]

Yesterday I wrote an article about research that shows that too much compensation actually makes performance worse.  A fellow Rotarian (thanks Skip!) sent me a link to a great video by RSA Animate that illustrates the issue and the research.  If you haven’t seen it take a look:

Dan Pink: Drive and Purpose YouTube Video

Paul Kiser - CEO 2020 Enterprise Technologies

The article is here: (Mega Executive Pay Leads to Poor Performance)

But the question is why does mega pay negatively impact performance? Here’s my theory.

The Psychology of Making Too Much Money – Barney and the Manna ATM
A man named Barney goes to withdraw $500 from his local ATM. Instead he is given $5,000. When Barney checks his balance it shows that no money was withdrawn from his account. He could go to the bank and let them know that he thinks the ATM has made a mistake but he doesn’t. Initially he is afraid that someone will discover the mistake and take the money away, but no one says anything and eventually Barney’s fear eases. Each week he goes back to the same ATM for another withdrawal and the same thing occurs. He tries other ATM’s, but he learns that it is just this one that gives him money for nothing. Soon he has built a life around getting $5,000 every week from this ATM. His fear has now subsided, but he feels a little guilty, but also a little evil.

One evening Barney is in a rush for the money and pushes a woman out-of-the-way to make his transaction. The woman is irritated but stands to the side while Barney enters in the information. When the money comes out she notices that he received $5,000 but only requested $500. She points this out to him and he denies it. She knows what she saw and she won’t be convinced. Barney offers to give her half of the money and she refuses the offer. She says she is going to tell the bank….What will Barney do to keep his lifestyle?

When examining behavior by executives and managers in the banking crisis of 2007-09, the answer to that question: “What will a man do to keep his lifestyle?” (I’m not being sexist, just accurate) is answered by the unethical business decisions that led to massive financial failures in 2008-09. Pay might purchase a person’s talents for an organization, but at a certain point, too much compensation begins to purchase the person’s ethical compass. Good decision-making is replaced by self-preservation and the future of the business is sacrificed for the financials of the current quarter.

The lesson is that too much compensation becomes a trap that will often lead to unethical decisions. Mega pay not only doesn’t improve performance, it lures executives to the dark side.

Maslow's Hierarchy of Needs

The Psychology of Making Too Little Money – Maslow’s Hierarchy of Needs
The other side of the issue is paying too little. In 1943, a researcher named Abraham Maslow published a paper titled: A Theory of Human Motivation. The work was based on examining successful people and their living situations. From his research he concluded that there is a Hierarchy of Needs that must be met in steps, with each step supporting the next level.

In Maslow’s paper he proposes that humans must meet their basic survival needs that contribute to sustaining life as the base level of life; however, security and safety needs are the next level. All levels above that (Belonging, Esteem, and finally, Self-Actualization) are dependent on the needs of the first two levels being met.

This is the key. Employers that fail to compensate their team to the point of a living wage should expect their staff to be in a constant state of crisis and that means they cannot expect these employees to be creative and innovative in dealing with the common issues that might arise with the customer. An underpaid employee will be in a constant state of personal crisis that will lead to many issues including reliability, focus, and attitude.

The question is how much is a living wage? That takes an individual examination of the job, the market, and the economy of the region. As the video suggests, you should pay enough to take money off the table as an issue.

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