LEADING THOUGHTS

Let’s pump up employees and stoke their competitive juices by ranking them against their peers. Better yet, let’s throw cold water on them. Comparing workers to their peers is usually a lousy idea, and here’s why. Go to article

The organization is flying through the turbulence of change. What does it do? Throw gobs of money at senior execs and “star” performers to induce them to stay on board? There is a more shrewd and less costly solution. Go to article (requires registration)

The issue: When selecting a new leadership team, should CEOs use a scientific approach that is fact-based and analytical? Or should they emphasize subjective factors such as personality, loyalty, motivation, politics, and team chemistry? Let the debate begin. Go to article

C.K Prahalad gave us core competencies, the bottom of the pyramid, constrained innovation, and a few other mind-bending management theories. Until his dying days, he believed that individuals, not institutions, were central. Institutions are merely “different ways of combining skills and capabilities of the moment.” Go to article

Learning and development pros have been getting an easy ride when it comes to showing the business value of training. Lame surveys no longer cut it. Fortunately, the Boys & Girls Clubs of America can show how to tie training to key business performance metrics. Go to article (registration required)

Beefy bouncers at Manhattan nightclubs can tell us a thing or two about status cues and how rewards are doled out. I’ll let you connect the dots to organizational life. Go to article

I was just rereading an interview that the Gallup Management Journal conducted with behavioural economist Alan Krueger, Bendheim Professor of Economics and Public Affairs at Princeton University. Krueger was talking about how the pay structure has to be perceived as fair if an organization wants to get maximum performance out of employees.

GMJ: How fair does it have to be if it’s secret?

Krueger: That’s a good question, and I’ve done a little bit of research on how much employees know about what their fellow workers are paid. I once did a survey with employees at a non-union service company. We asked employees to identify another worker and then tell us how much they thought that other worker was paid. Most of the time, they couldn’t or wouldn’t guess. It’s a taboo subject, and not delving into it may be one way in which employees cope with the sensitivity of the issue. By the way, this was a fairly enlightened, progressive company. I think one way in which workers find it easier to work with each other is not to even speculate on those subjects.

GMJ: So do issues of pay hold the same power in companies where people do know how much everyone else is making, such as union shops?

Krueger: I suspect that morale suffers. I think there are probably reasons why the social norms developed that discourage employees from discussing pay and employers from bringing it up. But I think employees do want their pay structure to be perceived as fair in case information leaks out. It is also interesting to note that unionized workers report being less satisfied with their jobs despite their higher pay, on average.

Today’s organizational principles are based on the idea that the workforce is shaped like a pyramid, with many young people at the base, a medium number of mid-career workers in the middle, and fewer older workers at the top. In reality, the workforce is beginning to look more like a rectangle with nearly the same number of workers at each life stage, writes Tamara J. Erickson, president of nGenera Innovation Network in the journal People & Strategy.

Given this reality, Erickson asks a number of provocative questions regarding organizational design:

Is it time to redesign career paths for lateral moves, with less dependence on promotion? Tie variety, recognition, learning, and compensation to the development of capabilities that are not necessarily related to hierarchy.

Do we need titles and, if so, for what purpose? Titles that clarify the function a person performs are essential; titles that recognize movement up the org chart are less so.

Does a career need to be continuous and linear? Provide employees with the opportunity to leave and re-enter the workforce.

How long should we expect people to stay in one job or even in one company? Redesign jobs to accommodate frequent movement and short tenures per role.

Should we redefine work in terms of tasks rather than time? Have employees put in only as much time as it actually takes to get the work done, and remove the need to keep regular hours or show up at the office each day.

How can you ensure employees are choosing you? Find ways to let prospective employees understand for themselves what it is like to work in your organization, and then encourage the prospective employee to evaluate the fit.

Redesigning Your Organization for the Future of Work, by Tamara J. Erickson; People & Strategy (Human Resource Planning Society, Vol. 31, Issue 4)

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: Engin Erdogan

According to the U.S.-based Center for Effective Organizations, the number of Fortune 1000 companies using team-based incentives increased to 85 percent in 2005 from 59 percent in 1990. Seems to make sense: organizations are busting silos in favour of cross-functional teams, and if you want to encourage teamwork, reward the collective effort.

Research by Kimberly K. Merriman of Pennsylvania State University casts some doubt on that logic. She has found that team incentives are often counterproductive to motivating teamwork because of perceived inequities.

Merriman studied 49 project teams comprising graduate students within a U.S. business school. The team reward was grades. Collectively, the team members in her study strongly preferred rewards based on individual contribution to the team (equitable team member rewards) as opposed to rewards based on collective team performance (equal rewards for each team member). Not surprisingly, those who viewed their teams as less trustworthy in terms of ability or honesty expressed stronger preference for equity than more trusting members.

The question is, how do individual team members perceive “fair” team reward? In a follow-up study, Merriman identified four ways that organizations fail to make team rewards appear equitable.

Consistency across the team: The value of team rewards is undercut when certain team members are overlooked, perhaps because they are from a different department or lower on the hierarchy. “It seems that many managers are under the mistaken impression that team members do not compare rewards,” Merriman writes.

Consistency over time: It is better for long-term team member motivation to maintain a no-reward policy than to provide a one-time reward that skews expectations.

High or low performers recognized differently than other team members: “It seems if at least extreme differences in performance are acknowledged—providing greater rewards to top performers and penalizing very low performers—employees may feel equity has been served.” Easier said than done: a good way to identify high and low performers is to ask for confidential feedback from team members themselves.

Tolerance for pay risk: “Whereas an employee may be content to risk a meaningful portion of their pay on their own performance, the same amount of pay tied to the collective performance of team members is often seen as too risky.”

In her paper, Merriman also offers a short case study of one manufacturer’s approach to the issue.

On the Folly of Rewarding Team Performance, While Hoping for Teamwork; by Kimberly K. Merriman; Compensation & Benefits Review (Jan-Feb 2009, 61-66)

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: fisserman