What Drives Performance: Pay or People?
Most business people think that financial reward is the main driver of performance and a fulfilling workplace is a consequence of, not a contributor to, HIGH performance. Design the right incentives. Set stretch goals. Focus people on key objectives. Measure, measure, and measure some more. Hold people accountable. Watch the money roll in.That was easy.
Hold on a minute. Numerous surveys show that the vast majority of American companies have some type of variable pay program in place yet few of them attain and sustain high levels of performance. If pay is such a powerful motivator then why aren’t more companies doing better?
Pay for Performance is Not the Answer
A large body of research shows that it works best in individual production environments where output quantity is important and can be measured. But pay for performance schemes aren’t as effective in the aggregate or when the goal is producing knowledge-based outputs that have largely intangible value. Performance bonuses alone won’t produce the next breakthrough drug, killer app or Starbucks retail concept.
So what can you do to take your organization’s performance to the next level if bribery isn’t working?
A Better Solution
Try offering a different work experience to your talent. There is a growing and compelling body of evidence showing a direct correlation between progressive people management practices such as investment in training, worker participation in decision making, and employee recognition programs and hard measures of business performance such as sales revenue, market share, profits and shareholder value. One study of several hundred companies by researchers at Rutgers University uncovered these stunning results: organizations using the most progressive people practices had 50 percent less turnover, 3.5 times greater sales per employee, and over three times greater market value to book value of their shares. Several others show similarly impressive results.
So if you want performance, start paying more attention to people and less to pay. Give people the work environment they need to excel. Spend more time delivering a fulfilling work experience and less fiddling with incentive compensation schemes and watch your company take off. Create a Next Generation Workplace.
What Is A Next Generation Workplace?
A Next Generation Workplace is a place to realize human potential not just make money. It employs practices that ignite the passion and unleash the talent of workers. As a result, it delivers high fulfillment AND high performance.
What can individuals and managers do to create next generation workplaces? The challenge at hand is in many ways an individual one - to create the future one person at a time.
The next generation workplace will be built from the ground up far more than by top-down interventions. It will evolve through experimentation - trying new things, implementing new practices, doing work differently, interacting with colleagues in innovative ways and managing people with the vision and belief that companies can be places where passion is inspired and talent unleashed. It might begin in a few cubicles, with the odd team, a work group or perhaps in a department or business unit of a company.
The workplace can be changed for the better if enough people devote their hearts and minds to making it happen. The most important thing is to make a start because the future of work begins now.
Isn't time your workplace caught up to the future?
An Invitation to Join Us
Next Generation Workplace is an initiative to bring like-minded people together in a campaign to change the workplace for the better. Whether you already work in a progressive organization and wish to stay at the leading edge or labor in an uninspiring one that you desperately want to change, we invite you to join with us in building an active community of workplace change agents.
