Aligning Rewards with Desired Behaviors: A Deep Dive into Organizational Inconsistencies
In today’s dynamic organizational landscape, one of the most pivotal yet often misunderstood aspects is the reward system. Steven Kerr’s seminal piece, “On the folly of rewarding A, while hoping for B,” offers invaluable insights into the discrepancies between what organizations reward and what they truly desire. The widespread incongruities in the reward mechanisms raise a pressing question: Why do organizations reward one behavior when they hope for another? Here, we dive deep into Kerr’s analysis and its implications for modern workplaces.
The Reward Paradox: Societal and Organizational Examples
- Politics — The dichotomy of official and operative goals often leads politicians to avoid discussing detailed plans until post-elections.
- War — During the Vietnam War, the organizational goal of winning clashed with the individual soldiers’ objective of returning home, highlighting the misalignment between overarching goals and individual rewards.
- Medicine — The fear of tangible consequences pushes doctors to over-diagnose, which not only affects the patient’s well-being but also financially benefits the physician.
- Rehabilitation Centers and Orphanages — Reward systems can complicate child placements or prioritize the institution’s interests over the child’s well-being.
- Universities — The emphasis on research and grades overshadows true knowledge acquisition, leading students to seek shortcuts.
- Business Practices — Reward systems may incentivize behaviors such as ignoring pollution rules, failing to evaluate training programs effectively, and focusing on short-term benefits at the expense of long-term growth.
Insights from Two Companies
Manufacturing Organization:
A striking discovery from this case is the discrepancy between how lower-level employees and management perceive rewarded behaviors. Lower-tier employees felt behaviors disliked by managers, such as conforming to higher-ups, were indeed rewarded. In contrast, desired behaviors aligned more with higher job levels.
Insurance Firm:
Despite the firm’s emphasis on claim accuracy, the reward system inadvertently encouraged overpayments. The minimal differences in merit increases, along with an attendance-driven reward system, meant that the organization prioritized presence over performance.
Root Causes of Misaligned Rewards: A Deeper Exploration
Organizational reward systems play a fundamental role in shaping behavior and driving outcomes. When these systems are out of alignment with the actual goals of the organization, it can lead to unintended consequences, reduced efficiency, and conflicts in direction. Steven Kerr astutely pinpoints the root causes of such misalignment. Let’s delve deeper into these causes:
1. Fascination with an “Objective” Criterion
The allure of objectivity: In an era driven by data and metrics, organizations often fall into the trap of valuing numbers for their perceived objectivity. Quantifiable measures are seen as devoid of bias and therefore reliable.
The Pitfall: While the allure of objective metrics is undeniable, such measures might not always encapsulate the nuances and complexities of organizational tasks. For instance, a sales team might be evaluated based on the number of calls made, but this doesn’t account for the quality of customer interactions or the potential long-term relationships built.
Implications: Relying heavily on ostensibly objective metrics can divert attention from crucial qualitative aspects, which, though harder to measure, can be vital for an organization’s success.
2. Overemphasis on Highly Visible Behaviors
The Spotlight Effect: There’s a natural tendency to reward behaviors that are easily seen. This is not just because they’re easier to measure, but also because they often garner more attention, both internally and externally.
The Pitfall: When easily observable tasks become the yardstick for rewards, it can sideline less-visible but equally (or more) important tasks. For instance, while a researcher’s published papers might be easily quantifiable, the effort and time put into mentoring students might go unnoticed.
Implications: This skewed focus can disincentivize essential background tasks and foster a culture where only the visible is valuable, potentially stifling innovation and holistic development.
3. Hypocrisy
The Duality: Organizations often have a public face and a private reality. While the public image is crafted to align with societal values and norms, the internal workings can sometimes deviate from this image.
The Pitfall: When employees notice a discrepancy between the organization’s public stance and the behaviors it rewards internally, it can breed cynicism and distrust. For example, a company might publicly denounce office politics but may reward those who play the game best with promotions or other benefits.
Implications: This dissonance can demotivate employees who align with the organization’s stated values and can undermine organizational integrity and cohesion.
4. Emphasis on Morality or Equity over Efficiency
The Moral Compass: At times, moral and equitable considerations can overshadow the drive for efficiency. This is especially true for organizations that have a strong social or community focus.
The Pitfall: While focusing on morality or equity is commendable, it can sometimes lead to practices that are not the most efficient. For instance, an organization might hire from within a community to support local employment, even if there are more qualified candidates elsewhere.
Implications: The trade-off between ethical/moral considerations and efficiency can lead to potential resource inefficiencies. However, it’s also worth noting that such decisions can have intangible benefits, like increased community goodwill or employee loyalty. Furthermore, increasing efficiency shouldn’t lead to exploitation, breaking law, or leading to lack of ethics.
In understanding these root causes, organizations can be better equipped to refine their reward systems, ensuring that they not only drive desired behaviors but also truly reflect organizational values and goals.
Navigating the Reward Conundrum: Solutions and Conclusions
Modern organizations are an amalgamation of varied goals and objectives, often leading to differing agendas among stakeholders. To combat the challenges of misaligned rewards, Kerr suggests:
- Selection — Though an ideal solution, it’s challenging to find candidates whose objectives perfectly align with an organization’s.
- Training — While organizations can train employees to align their goals, the effectiveness of such programs remains questionable.
- Altering the Reward System — Recognizing and adjusting current rewards can provide clarity on behavioral discrepancies, allowing organizations to streamline desired behaviors. By refining the reward system, organizations can bypass the challenges of selection and training, emphasizing positive reinforcement instead.
In conclusion, while reward systems in many organizations may seem counterproductive, understanding and rectifying these inconsistencies is crucial. As the adage goes, “What gets rewarded gets done.” Thus, ensuring alignment between rewards and desired behaviors is paramount for organizational success.
Source: Kerr, Steven. “On the folly of rewarding A, while hoping for B.” Academy of Management journal 18.4 (1975): 769–783.
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