Concluding our series on performance management, today’s focus shares input from our Partners in Improvement on how to motivate people to improve their performance.
During our discussion, some focused on the individual quantitative measurements to focus and motivate individuals on achieving 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.
Other Partners said that group rewards and recognitions were more effective than individual metrics. For example, one Partner 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 relative 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 expressions of “thanks.”
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.
The keys to effective use of recognition as a motivational method are timeliness and making the recognition public. This is no time to keep your appreciation under a barrel. One successful program is called ‘Six Star’: people award one another stars for helping an internal or external customer. When someone gets 6 stars, they get a gift card and the ‘star of the month’ gets a party, recognition, and a parking space
While there are clearly a wide range of views about how to manage and motivate performance, several final conclusions generated quite a bit of support:
- Performance Management 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 formal annual reviews.
- 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.
- Avoid managing performance through the rear view mirror – be proactive!
- Make more of the goal setting process which produces targets against which we measure performance and take corrective action.