1: “People with targets and jobs dependent upon meeting them will probably meet the targets, even if they have to destroy the enterprise to do it,” observed W. Edwards Deming, the eminent scholar and management theorist.
Our “real job” is to help our company win, Fred Kofman writes in The Meaning Revolution. “That is, to accomplish its mission profitably and ethically.”
But that’s not what we get paid to do. In most organizations, Fred suggests, we “get paid to play our role.”
Yesterday, we examined a situation where a Comcast customer retention representative berated a customer for wanting to cancel their Internet service.
The call was recorded, creating a public relations fiasco for the company.
“At times, our job contradicts our role, since it requires that we sacrifice our agenda, change our priorities, or take a hit in our individual key performance indicators,” Fred notes.
Many times, our compensation is determined by how well we achieve our specific targets. But, by not allowing a customer to cancel their Internet service, the Comcast associate harmed the organization’s larger goal, which is to take care of customers and avoid PR nightmares.
“The point is that too often each individual, and each part of the organization, pursues his or her own interests at the expense of the whole,” writes Fred.
Do we get rewarded for helping our company win? Many times, no. In fact, we may get “punished” for doing so.
Which is infuriating.
“How can they be so stupid!” Fred writes. “They are setting me up so that when I do the right thing, I end up worse off.”
2: We might think: Why don’t they just tweak the “damned incentive system”?
Why not? Because “it turns out that a perfect incentive system is a mythical entity, like a perfect car,” Fred suggests. We “must choose between comfort and performance, between crashworthiness and fuel consumption, between quality and economy.
“We can’t have a family sedan that is roomy, safe, reliable, and economical and that performs like a sports coupe that is fast, responsive, nimble, and powerful.”
Trade-offs are a fact of life.
“Organizational leaders,” he writes, “have to make some hard choices: accountability or cooperation, excellence or alignment, autonomy or coordination.
“Unfortunately, collaboration conflicts with accountability, and collective performance conflicts with individual excellence.”
We can’t have both. “It’s like a blanket that is too short,” he suggests. “If we pull it up to our chest, our feet get cold; if we cover our feet, our chest gets cold.”
Fred notes: “On the one hand, individual incentives create silos; on the other, collective incentives destroy productivity.”
3: So, what do most organizations do?
They “stick with the devil they know—individual performance indicators—and accept the consequent impact on collaboration,” Fred observes.
There is, however, a different and better way to solve this problem.
As leaders, we must create meaning in our workplace. What Fred calls “the ultimate nonmaterial incentive.”
The bad news? “The kind of leadership that can engage people in meaningful work is much, much harder than we think.”
More tomorrow!
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Reflection: Are there areas in my organization optimized for a specific function’s success rather than for the larger organization?
Action: Discuss with my team or with a colleague.