In his latest podcast, Aubrey Daniels discusses the reality that salary and hourly pay produces the lowest performance, and instead companies, at the very least, need to build in contingencies of reinforcement.
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What do having no accidents, making no errors and handing out a bonus across the board have in common? They all reward things a dead man can do! Listen now.
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The modern organization wastes more time and money in the way people are compensated than it wastes in any other area of the business. Salary and hourly pay is pay for showing up, not for performing. Raises are forever. Bonuses are only loosely contingent on performance. Even profit sharing and pay-for-performance plans are poorly designed to create the best performance.
New YouTube video where Richard Warner and I discuss. www.youtube.com/aubreydaniels
Let’s say that you make business decisions where the impact on the future of the business is not well-thought out. The decisions are praised by Wall Street but, even so, turn out to waste the resources of the business over the long term. Let’s also say that in an effort to grow the company fast, you buy assets above market value to close the deals quickly, hire talented employees and pay them outlandish wages in order to get up and running as soon as possible. You also have little understanding of how to effectively motivate people but believe that money is most effective. In particular, you believe that money will buy you the right talent, since you believe money is what matters most to talented people. Therefore, you either use salary, bonuses or other perks to motivate them.Then let’s say that as the result of current economic conditions, your company has fallen on hard times in no small part due to the excesses created by your growth strategy and financial excesses. (more…)
From Mary Tyler Moore to Mad Men, the workplace has served as the setting for many of television’s most acclaimed and beloved series. It’s no wonder. The office provides the ultimate backdrop for observing human behavior in all its glory, moving us to laugh, cry, and, all too often, cringe and cover our eyes.
In my latest book, OOPS! 13 Management Practices that Waste Time and Money (and what to do instead), I look at 13 time-honored management practices that actually reward bad habits and punish good behavior, often with devastating results.
With the new season of Mad Men about to premiere and the fall season on the horizon, I thought it would be both fun and revealing to look at how five of our favorite television bosses stack up against the 13 common management mistakes highlighted in Oops!
Over the coming weeks, I’ll be adding to the list with other management mistakes from TV land and I invite you to share your own favorites. We’ll give away five copies of Oops! to the best suggestions we receive. Send your submissions to http://www.aubreydanielsblog.com/ask-aubrey/.
Michael Scott (Steve Carrell) – The Office
Made OOPS Mistake #1 - Employee of the Month
What went wrong:
Michael created the Dundies, an annual awards show in which he presented awards to various members of the office based on their job performances.
While his goal was to motivate all employees to deliver superior performance, the Dundies, like other “employee of the month”-type programs, ended up angering or humiliating the majority of the office staff. The problem is that only one employee can earn the accolade while the others are left with performance that goes unrecognized – violating every known principle of effective positive reinforcement.
What to do instead:
Michael can make his efforts more effective by setting measurable criteria and rewarding and recognizing everyone who meets or exceeds the goals. In order to make recognition effective, Michael must create a culture of positive reinforcement that provides ongoing positive reinforcement for everyone who goes above and beyond their daily activities.
Liz Lemon (Tina Fey) – 30 Rock
Made OOPS Mistake #12 – Downsizing
What went wrong:
When Liz must reduce staff by 10 percent, the entire staff tries to please her to avoid being laid off and Liz ultimately bases her decisions on irrelevant factors, such as firing a romantic rival. By indiscriminately firing employees, the remaining employees will likely wonder if they are next and develop a distrust of management. There will also now be more work for fewer people, potentially leading to lower office morale and productivity.
What to do instead:
Rather than allowing employees to try to sway her firing decision, Liz should have gotten all employees involved in a solution as a first step to avoiding a layoff, such as eliminating wasteful expenses or taking salary cuts or furlough days.
If layoffs must happen, Liz should treat those being terminated fairly and generously in order to demonstrate to those remaining that she cares for her employees. Most importantly, Liz must make sure that she increases positive reinforcement for those who remain as they take on additional work.
Simon Cowell / American Idol
Made OOPS! Rule #7 - “You did a good job, but…”
What went wrong:
While Cowell’s primary goal is to entertain, like all bosses he should also want inspire contestants to improve upon each of their performances. However, his critiques sometimes combine both positive and negative comments as in “Although it was good, I don’t see it as an American Idol-winning performance” or his critique of Idol winner Taylor Hicks: “You’re like every dad who’s ever got drunk at a wedding … got on stage and sang. The difference is, you can sing.” The effect of such statements is to cause people to ignore the positive comments and obsess on the negative comments. It is a prodding, nagging style of management that does not motivate and is more often a punisher.
What to do instead
Always separate complements from negative criticisms. Give the good first and at a later time deliver the corrective feedback. That way the good will be valued and the employee will be more responsive to the corrective feedback.
Wilhemina Slater (Vanessa Williams) – Ugly Betty
Made OOPS! Rule #11 – Promoting People No One Likes
What went wrong:
There is a perception in leadership that managers who are well-liked are not effective at producing results. It is understandable given that most managers believe that hard-nosed, negative practices are the most effective. They are not. Case in point: Wilhemina Slater. Backstabbing, cruel, and vindictive, Slater may strike fear in her employees, but she is ultimately only able to hold onto her position through scheming rather than inspiring great work among her team. Bully bosses also create toxic workplaces. The only thing her two assistants seemed to have learned from Slater is how to scheme and backstab just like her.
What to do instead:
The first test in promoting someone to management is whether people would want to be around this person. If the person does not have good social skills, look for someone else. Look for those managers and leaders that get results the right way; those that understand behavior from a scientific perspective and can design systems, policies and procedures that bring out the best in people everyday. These people are always well-liked.
Ari Gold (Jeremy Piven) / Entourage
Made OOPS! Rule #2 – Stretch Goals
What went wrong:
Like Slater, Hollywood agent Ari Gold is the epitome of the “bully boss,” crass, offensive, and constantly disparaging his assistant Lloyd. In this instance, however, Gold turns to a time-honored business practice – stretch goals – which ultimately backfires on him. When the career of Gold’s client, Vince Chase, is at an all-time low, Gold puts pressure on his staff to develop a presentation and strategy that will put Chase’s brand on par with Microsoft and McDonald’s. The presentation comes off as rushed, thoughtless, and unsympathetic, ultimately pushing Chase farther away.
What to do instead:
The problem with stretch goals is they are typically set too high and people fail to reach them 90% of the time. With a 90% fail rate, efforts to reach these goals diminish over time and discretionary effort toward all goals is eventually extinguished. To get Chase’s career back on track, Gold should have set many mini-goals instead. Managers need to ensure that positive reinforcement is delivered for the many small achievements along the way to reaching some final goal.
When I saw an article reported in the New York Times about Citigroup’s plan to increase employees’ base salaries by a much as 50% to offset the reduction in bonuses I was reminded of Sigmund Freud’s repetition compulsion. Wikipedia defines it as a “psychological phenomenon in which a person repeats a traumatic event or its circumstances over and over again. This includes reenacting the event or putting oneself in situations that have a high probability of the event occurring again.” This is exactly what Citi is doing. They are repeating the mistakes of the past, only this time they are actually making them worse. It is one thing to reduce or forego a bonus because of bad results; it is quite another to reduce a salary. To compound the error, they are planning to award millions in new stock options. While employees will take them and some will be grateful, they will do nothing to increase the long term viability of the organization. The consequences of stock options are way off in the future and very uncertain.
I have written more about this in my book, OOPs, but in a nutshell, I predict that increasing salaries to offset bonuses and offering stock options will accomplish none of the stated goals of Citi. They will not attract or retain the best talent. They will not improve productivity or customer service. They will put a burden on future earnings.
Now is the time for Citi to correct the sins of the past, not repeat them.
I read an article from the New Zealand Herald by Simon Caulkin (3.16.09) that caused me to alternate between depression and excitement. The title of the article is: Bonuses boost performance? Sorry, but it’s the very opposite.
My depression comes form the fact that it is just more evidence that people like Mr. Caulkin don’t have even an elementary understanding of behavior — how to get behavior and how to sustain it. The excitement is that because our business is about helping business people understand and apply the science of behavior to change the way the world works. His article tells me that there is a lot of business yet to be done. (more…)
AIG is in the news again. They are being beat over the head because someone has found that they have 374 bonus plans. While most people are upset seeing the word attached to AIG in any way, the fact that they have 374 bonus plans is not surprising in a company of around 100,000 employees. I would suggest that they should have more!
The issue is not the number of plans but the quality of the plans. In a bad economy, bonuses can be used very effectively to increase business. The problem I had with AIG bonuses when they were first discovered (See my blog – AIG Gives Bonuses a Bad Name) was that they were obviously not tied to the right business behaviors or results. When done right, bonuses are a very effective way of driving outstanding business success; when done incorrectly, as they usually are, they can be devastating.
Is it possible to have 374 different bonus and compensation plans?! This recent article from Politico uncovers the half-truths and realities of how AIG compensated its employees (AIG Bonuses Four Times Higher), like I said before in my original post AIG Gives Bonuses A Bad Name, (March 13, 2009).
