Leadership Malpractice: – The Contingency Pay-for-Performance Policy

July 26, 2012 § Leave a comment

Employee engagement is the hot topic today. More and more leaders today are beginning to recognize and appreciate that engaged employees are more productive and do higher quality work. Engagement is an emotional response to work such that employees willingly exert extra voluntary effort in their jobs. Unfortunately, every measure of employee engagement remains at a dismal level between 21% and 31%. Is the root cause of these dismal scores in the employees or in the leadership?
Apparently there are an entire series of quotes that take the form, “There are no bad [something], only bad [something else].” For example, “there are no bad dogs, only bad owners”; “there are no bad foods, only bad diets” etc. I want to add a new one, “There are no purposely disengaged workers only leadership malpractice.”
I hope it is clear that I am not suggesting employees should be treated like dogs. My point is dogs are naturally motivated and happiest when they are treated consistent with “pack mentality.” Dog trainers who treat dogs consistent with pack mentality have the happiest and best behaved dogs.
Similarly, people are naturally motivated by “engagement psychology.” Leaders who understand engagement psychology and create an environment consistent with it will have engaged employees. Unfortunately, most leaders have not been taught the correct engagement psychology thus many organization (if not most) consistently have high disengagement, poor productivity, and poor performance.
Leadership malpractice typically takes the form of sophisticated ways of blaming employees for poor results. Leadership malpractice uses phrases like “a leader must drive performance” or “we must drive results” because, the assumption is, employees can’t do it without the leader pushing, pulling, driving, supervising, overseeing, and evaluating.
There are many policies that emerge from this way of thinking but I want to address them one at a time in a series of blog posts. This post will deal with the very popular pay-for performance policy. This policy is consistent with malpractice because it’s designed to control employee behaviors in order to achieve specific results.
People want to be rewarded for their hard work and they should be but when leaders make the individual rewards contingent on specific individual goal achievement it crosses the line into malpractice. Leaders think this policy will increase employee engagement but it instead violates the engagement psychology. The use of contingency pay-for-performance to achieve organizational results is akin to the use of bloodletting leeches by physicians in the 1700’s to cure heart disease. The typical pay –for-performance policies violate employee engagement natural law and therefore they:
• Attempt to control behaviors (e.g. they limit options)
• Send a message of distrust (i.e. employees would not work on the right things with the right effort without a reward)
• Limit innovation (there may be a better result employees could work toward)
• Ignore interdependence (achieving a goal in one area of an organization might cause waste in another area)
• Increase the probability of dishonesty to achieve a specific goal to receive a specific reward (e.g. people often cheat if they think they need to do it to achieve their individual goals and if they think they can get away with it)
An alternative reward system consistent with systems thinking and aligned with engagement natural law will instead:
• Align with a larger purpose and or the compelling mission of the organization and not just the individual needs of the single employee
• Allow for choice in methods for completing tasks and accomplishing the individual goals
• Give employees opportunities to be challenged and to optimize the use of their strengths
• Enable employees to track their own progress with control over their own feedback without dependence on the biased ratings usually issued by managers
• Demonstrate clear progress toward a win-win set of outcomes for both the individual and the organization.
• Share profit increases (because of the collective accomplishments) with a clear specific method and without biased judgments about individual performance e.g. who is more responsible for a winning no-hitter baseball game, the pitcher who throws the ball, the catcher who reads the batters and calls the types of pitches, or the teammates who field the grounders and fly balls?
This alternative reward system optimizes intrinsic motivation and increases employee engagement. It minimizes the controlling extrinsic motivation created by contingency based policies.
Leaders who want to increase employee engagement must design their pay-for-performance policies consistent with employee engagement psychology. Otherwise, regardless of their good intentions, they are undermining the very thing they are trying to accomplish i.e. engagement and sustainable improved performance. They will be practicing leadership malpractice.
Leadership malpractice will be a series of blogs. Please email me with any ideas or comments.

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