Volume No. 9

Are You Rewarding Mediocrity?

As you walk through life today, look around you. While there are some notable exceptions, it seems to me that more and more people and institutions (from health care to education; municipal services to private business) are turning to mediocrity as the benchmark standard for performance.

Despite the great strides made in customer service and quality during the 80’s and 90’s, we seem to have slipped as an industry. Of course, that’s the opinion of yours truly…someone who has very few “completely satisfied” bones in his body. That notwithstanding, the acceptance of mediocrity is something that, if left unchecked, will destroy whatever culture of innovation still remains alive and well.

So what drives people and companies to accept mediocre performance? What if I told you that the answer lies in the very reward systems that are designed to drive innovation and excellence? Yup, that’s right. The very systems we implement to drive innovation are the very systems holding back the next wave of performance gains we so desperately want.

In particular, there are two aspects of our performance management systems that can cause such an unwanted and unexpected outcome:

The first, relates to how we set goals. Many organizations use external benchmarks and internal data to build their performance targets for a particular reporting period. The problem is that there is a big temptation to look at performance against the average or median of a particular reference group. Sure, we might look at top quartile or top decile, but in the end its human nature to shrug these off as coming from companies that are “way too different from us.” There’s also a tendency to err on the side of “achieve-ability” or “attain-ability”, the notion that we shouldn’t set the bar so high that no one will achieve it and subsequently end up discouraged and de-motivated. No doubt, setting the right goal is an art, and setting goals too high can get you into trouble. But erring on the short side of target setting can be equally destructive. The key to getting this right is to simply have two progressive sets of targets – one based on driving a smaller set of incremental improvements, and other at creating major “jump shifts” in performance. When combined with the right reward mechanisms (discussed below), the two-tiered goal setting philosophy can really help drive that next level of innovation.

The second factor driving performance mediocrity is the reward system itself. That is, what happens when the goal is attained? Our old friend B. F. Skinner had a lot of great insight on this subject…enough to fill a small library. But here are a few highlights to chew on. Is your reward system based on punishment (the infliction of a negative consequence for failing to meet targets), negative reinforcement (absence of a negative consequence for achieving targets), or positive reinforcement (giving a positive consequence for achieving results)? Is the schedule for reinforcement (when, where, and how much reinforcement is delivered) predictable or varied? Do you reward different tiers of performance differently? Is the gap between average performers and superstars too small? Is there an implied ceiling in your reward system where there is no benefit for pushing farther?

These and other factors drive what disciples of Skinner call “just enough to get by performance.” For example, the difference between punishment or negative reinforcement (e.g. "achieve this level of performance and you get to keep your job"), and a positive reinforcement (a sliding bonus schedule for meeting, beating, and exceeding expectations) can be enormous. The former keeps the employee’s eye on the standard that will allow him to not lose his job – usually nothing more, nothing less. Not exactly what you want if a paradigm shift is what you're looking for.

Similarly, having a varied and unpredictable element to your reward schedule can also be a big help. Skinner showed clearly that while “static interval” reward schedules do work, they tend to drive “hockey stick“ performance in which performance accelerates toward the end of reporting periods. If, however, a more unpredictable schedule of reinforcement were added to the scheme, a more sustainable and increasing level of performance would be observed (anyone remember Skinner’s pigeons?).

Some would say these kinds of tactics are a bit too manipulative. To me, that's a load of #$%^@!. Human beings react to rewards, punishments, and any other kind of scheme you throw at them. In fact, you probably already have reward systems with these elements built into it. The only difference in what we’re describing here is that we are deliberate about it. We name the ambitious performance levels we want to attain, and we design the reward system to accomplish it. Manipulative? You bet.

So as you visit your local grocery store, doctor’s office, kid’s classroom, or your place of business – look, listen and learn from their mistakes. Then try applying some of these principles. The possibilities in performance are endless. We just need to be smarter about how we set targets, and how we reward those who achieve them.

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held international management consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services. UMS Group has consulted with hundreds of companies across numerous industries and geographies. Visit UMS Group at http://www.umsgroup.com or contact us directly at 973-335-3555.