If your remuneration and incentives are all geared towards individual reward, then who’s going to co-operate?
If they are all directed at delivering the monthly sales numbers, will anyone act for the longer term goals?
If you focus your strategy on increasing client numbers can you ensure your customer service values will be met?
If you measure working hours, but not quality and volume of work, people will be on time and possibly work long hours, but are unlikely to deliver their best work.
If your strategic focus is to increase retention, does it fit with your vision of growth?
Quite simply, defining and articulating your mission, vision and values, is a total waste of time unless it is backed up by organisational practices that put them at the heart of the organisation. In order to make the mission, vision and values the heart of an organisation, you must build the strategy, metrics and rewards around them.
Firstly, you obviously need to think about strategy. Many management tome has been penned on how to develop effective strategy, and to be honest, this is the part that many organisation seem to do well. It is a key part of any MBA programme. In his book ’The Advantage’, Patrick Lencioni asks a question to help organisations figure out their current focus – what he calls the strategic anchors. He simply asks, “What is most important right now? What do we need to do over the next 12 – 18 months to move towards our goal?” The key phrase here is “to move towards our goal”. Whatever strategic anchors you decide are important they absolutely must be consistent with your organisational mission. They must not step outside the constraints set by the organisational values and they must move the organisation towards it’s stated vision.
Secondly, whatever management information you decide you need to effectively report on your strategic progress and run your organisation should be designed to inform you whether or not you are working out your mission, how consistent you are with your core values and demonstrate whether you are moving towards your vision. Does your management reporting give you enough information to decide whether progress has been made towards the vision? Can you see the results of time and effort spent on the strategic anchors? Are you able to see good progress on the current vision?
If your MI does not allow you to answer these questions (alongside the day to day questions of sales, cashflow, P&L etc) then you need to improve your metrics. If your mission and vision are not reflected in the reporting that you receive, then either your metrics are wrong or you haven’t really defined your MVV correctly.
Lastly, whatever compensation, benefit and system of praise you implement should reward those people who execute the mission well and behave consistently with the desired values and strategic anchors. Moreover, it should sanction those who contravene the values and fail to work towards the vision.
Consider, Jennifer, one of his best sales people in your organisation. Over the last sales period she consistently sold more, 18% more than any other sales person and she always breaks her target with time to spare in the month. She is first into the office everyday and often last out. Measured by those facts, Jennifer is a top employee. She should be well compensated and she more than deserves to win your praise. Go Jennifer! Would you want to try and keep Jennifer in your sales team? Probably.
You might want to wait just a second before you offer her an improved contract. On the one hand Jennifer hits all the right numbers and seems to be the ideal candidate, but what if I told you that Jennifer’s manager is constantly getting complaints about her from other team members? Sour grapes? Perhaps, but apparently she arrives early and leaves late, so that she can cherry pick the leads she calls. She even calls leads from other sales people and steals their sales. She is underhand and rude to her team mates and many good employees have cited her behaviour in exit interviews as a contributing factor to their leaving. Couple that with the fact that the clients she brings in are often poor quality, they don’t remain clients long and they are difficult and expensive to manage, leaving little margin in working for them.
Would you still be working hard to keep her? Do you still think she deserves the big rewards? If she does, then over time everyone else on your team will start to behave the same way. Everyone will start to copy the behaviours of the people that are praised. Imagine managing a team of Jennifers, which is exactly what will happen if her sales numbers alone dictate the rewards. How might you adjust your metrics to ensure that you incorporated some way to assess the hidden depths of Jennifer’s abilities? How could you ensure that your rewards and metrics reflect the values that you have created for your organisation?
Culture Truth #6
What you measure and the behaviours you praise or punish will become your culture.
It’s also important to remember that your reward system should not be just about financial gain. Take a look at Daniel Pink’s research? He showed that money only motivates for non-cerebral menial tasks – the more you pay the better the outcome for those simple tasks – but once the tasks involve rudimentary cognitive skill, the more you pay, the poorer the outcome of those tasks. Pay your people enough for money not to be a factor and then find other ways to reward them. Ways that demonstrate your commitment to them and reinforce your MVV.
“Those acts motivated by emotional rewards are most consistently performed.”
You can choose to be very creative with your system of recognition and rewards. For example, you might try more flexible working; or leaving hand written notes on your teams’ desks; maybe organise special events; give high performers surprise and random extra days off; give out monopoly money that can be exchanged for gifts and treats. Whatever works for your people, as long as it constantly reiterates and rewards those in line with the mission, values and vision of your organisation.
How do you reward your staff? What are you measuring? Leave your ideas in the comments…