Our previous post referenced how high-achieving organizations are able to develop and sustain high performance cultures in which team members are engaged and highly-motivated.
During a recent discussion with Continuous Improvement leaders, various approaches to the motivational component of performance management were shared. Some organizations focused on the individual quantitative measurements to motivate individuals and to encourage them to achieve important goals. For example, tying individual goals to the organization’s KPIs was cited as an effective way to align behaviors with goals and make sure everyone knows exactly what they are expected to do.
However, others said that group rewards and recognition were more effective than individual metrics. For example, one participant described how teamwork deteriorated to the detriment of the organization as a whole after his organization switched to individual metrics and rewards instead of rewarding everyone based on achievement of the company’s key strategic metrics.
We also discussed experience with financial rewards as opposed to intrinsic rewards, such as recognition. Financial rewards did not necessarily produce the best results.
One participant explicitly pays people for participating on improvement teams in some of their plants, while one of their Midwestern plants is prohibited from paying for participation. The Midwestern plant relies on intangible rewards such as recognition and “thank yous.” Surprising to many, the Midwestern plant had a much higher rate of participation than the others, seeming to demonstrate that intangible or ‘intrinsic’ rewards can be more effective than monetary rewards.
Another organization found recognition, sometimes coupled with small gift cards, was an effective method for their organization.
Generally, it was agreed that the keys to effective use of recognition as a motivational method are timeliness and making the recognition public.
One successful example involved a peer-recognition program, in which people were empowered to recognize one another by giving-out stars for helping an internal or external customer. When someone receives a certain number of stars, they get a gift card and the ‘star of the month’ gets a party, recognition, and a preferred parking space. It was noted that guidelines for the awarding of stars were set in advance.
Another perspective relative to timeliness involved making motivational and performance management activities an “everyday job,” and basing strategies on more than just past data.
Over-reliance on past data when crafting improvement or motivational plans was referenced as working through the “rear-view-mirror.” A better approach not only enables managers to identify opportunities for team improvement based on analyzing past activities and results, but to also identify preemptive action steps and strategies that can impact outcomes and future results.
- Performance Management and motivation must be about much more than individual performance measurement. As Deming said, over 90% of problems are caused by the system not the person. To manage performance, we must manage the system by which people, plant, process interact to produce results.
- Frequent observation and feedback is more helpful to people than more formal annual reviews. Motivation and engagement levels were consistently rated as “much higher” when team members received frequent, consistent feedback on their work, and also when they felt they had input to improvement plans.
- Frequent communication about what an organization needs and wants greatly increases the odds that the organization will get what they need and want.
- Group rewards encourage teamwork, while individual rewards encourage an individual to optimize his or her own goals even if it may sub-optimize the organization as a whole.
- Tying money directly to performance appraisal can be a two-edged sword – raising stress and reducing the intrinsic rewards and personal satisfaction from doing a good job for the team.
- Intrinsic rewards tend to increase motivation over time as opposed to financial rewards. Recognition is among the most effective. The keys to effective use of recognition as a motivational method are timeliness and making the recognition public.
- Avoid performance management in the “rear-view mirror.”