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Motivation and Reward - 35+ years of personal experience, productivity bonus schemes, balanced scorecards, Herzberg, my father, Daniel Pink, Generation X v. Generation Y, and much more!
When my working life kicked off as a Trainee Industrial Relations Officer in the 1970’s, incentive based payments were commonplace amongst shop-floor-workers, as were strikes. If a site-load of engineering construction workers could walk out for a days’ ‘sympathy stoppage’ in recognition of the death of Elvis Presley, and hundreds of them did, and no it wasn’t the nick-name of a Welder on site; then no surprise that even then, occasionally and justifiably, I had to ask myself the question, “Just how much does money motivate”. Our fabrication works along the banks of the River Tyne were driven so it was believed, by piecework. Our progress on engineering construction sites was firmly considered to be driven by productivity bonus schemes. Any aspiring junior manager who dared to question the validity of such arrangements, would be cast withering looks by the senior management, for whom such arrangements had been in place, “before they were lads” on the shop-floor themselves. I was never certain just how accurately those schemes related to performance but an awful lot of effort went into ‘measuring’ performance. Oddly enough, the work-force didn’t seem particularly interested in how the scheme worked. Such schemes were a given. An occasional level of payment below expectation would be met with a quickly convened walk-out and the loss of another day of productivity and pay, followed by some token financial compromise gesture to get things back to normal. For a young Industrial Relations Officer, it was fertile ground in which to be planted.
Meanwhile such incentive arrangements were beyond application to white-collar workers such as me. My assumption was that the Company believed that I was either sufficiently motivated or well managed for there to be no need of such carrots. In my case, I think it could have been reasonably argued for the former to be usually applicable and the latter to generally be the case. Over the years my managers, most of whom could be considered to be a ‘character’, varied from maverick stars to the odd but well intended, including one who made Sir Alex Fergusons’ hairdryer approach to dishing out a roasting, look like the admonishments of a Benedictine Monk. Such is life’s rich tapestry however, that each provided me with valuable opportunity for education and at least a couple of anecdotes, plus some provided me with words of wisdom that I still trot out verbatim when the occasion warrants.
As my career developed within HR, so did the influence of the behavioural sciences and also the prevalence of the performance bonus scheme within higher levels of management, before spreading down to capture whole organisations, progressing to the balanced scorecard approach. I grasped the concept and delivered it across organisations; developing the scheme rules, calculating its costs and benefits, devising the scorecards, training the employees, convincing line managers of its worth and policing its principles. All of which brings me to a fundamental question. “Have they worked?”
And my answer is …… “I just don’t know”
The concept of linking reward to the business performance may credibly have some justification in making payment based on the ability of the business to pay; in other words, affordability. The scheme may on occasion be a bit clunky in its linkage, but there was always alignment with business performance. Did they bring greater focus to the key drivers of the business and the business unit? Well I believe that the balanced scorecard approach has me ant that businesses have expended effort on making the business direction and its roadmap more visible to more of its people and even made management take time out to talk about the business more often than with those within the business who may have in the past just been told to get on with it, whatever ‘it’ was supposed to be. To what extent it has engaged and motivated people, is debatable. It has highlighted low performers and differentiated between them and higher performers in terms of pay which sounds justified, though much depends on how well managed such arrangements actually were in practice.
So you ask why, after all those years of driving such schemes into businesses, is it that I now choose to question the validity of it all. My answer is that we are now in a different age and perhaps different rules of engagement apply. I always thought that the use of incentive based performance arrangements had a clear focus on compliance with organisation goals. So why have big bonuses been paid to people who have elected to step beyond compliance with the law which is a pretty fundamental compliance in the eyes of the vast majority of people? I can understand greed in individuals but I struggle with the idea that it overcomes common decency and even morality in a group such that they believe it to be acceptable to flaunt the reasonable expectations of society. And how do organisations consider it acceptable to justify such actions. If such schemes drive business performance, why are so many businesses struggling in the current economy?
I still firmly believe in business scorecards. They make a business think about its route to get to where it wants to be. A balanced scorecard is a strategic tool so let’s not lose sight of its purpose when they are in many minds so attached to pay for performance that their wider purpose could become overshadowed. Balanced scorecards have driven improved business performance; of that I have no doubt.
I go back 35 years and revisit the purpose of the bonus schemes prevalent in my early career and once again ask if they actually did serve to motivate people. Did the offer of financial reward to those who were amongst the lowest paid in the organisation, really lift their performance? It certainly didn’t stop them going on strike at the drop of a hat. If we didn’t produce as a business, we didn’t need to pay the human means of production as much; that is true. Did performance and reward schemes generate improved performance amongst my peers in management? In other words was individual performance better than it would otherwise have been. My response is to be uncertain, but with a strong tendency to think that the financial reward did not stimulate the performance in most cases. Difficult to say with any degree of certainty, but I genuinely believe that it did not in most cases, is my honest answer. With a bit of self-analysis, did attaching a sizeable chunk of money to my personal performance make any difference to how good a job I did or indeed how much thinking I put into how best I could perform on behalf of the business or add value to that business?. In my case I worked harder for great managers. I was more focused on results when I enjoyed what I was doing. I put greater mental and physical effort into things that I found challenging and interesting. I gave more at the office when I believed in the business direction. I was more resilient when I had faith in the cause. I was more prepared to follow and fight when I admired and respected those leading at the top. When I say respect, it was based in my personal view of deserving respect than respect for authority that they possessed and there were those that I respected that I didn’t particularly like, though I admit that it is difficult to separate the two. And when I use the verb ‘was’, I would proffer a belief that I still ‘am’!
I would like to tell a true tale about pay and performance. My father joined London & North Eastern Railways in 1947, the year before nationalisation and remained with British Rail thereafter for 45 years. He worked his way through the ranks from Locomotive Cleaner to Fireman etc. qualifying as a Driver in the late 1950’s. He still readily and regularly talks of having enjoyed his job, though it must be said that the shift patterns would have driven many to madness and an early death through sleep deprivation. He enjoyed the lack of close supervision, the sense of responsibility and the variety that went with the job. Being good at his job gave him real satisfaction and he also enjoyed being able to teach the young drivers coming through. However, driving trains wasn’t particularly well paid. He could have earned much more as a production operator at a local chemical works with an easier shift pattern, and he was offered that opportunity, but he enjoyed his job on the railways so he stayed. He wasn’t particularly motivated by money but saw opportunities to increase his earnings by such things as learning new routes that would take him further afield with different types of freight loads. Apart from giving variety to the job, such jobs brought financial advantages of additional payments negotiated at national or district level, to recognise a more complex job or perceived more onerous working conditions. For my father and British Rail it was a win-win situation. As a long standing ASLEF member, my father relied on his trade union to enter into collective bargaining to gain increased reward for job complexity and productivity gains to BR from his acceptance of changes to working practices, and also look after his annual inflation based increases.
However, my fathers’ greatest boost to his earnings capability was to capitalise on an opportunity for bargaining at a local level that was to be far more lucrative and also to provide a real productivity gain to BR. Each rostered working shift was allocated one or more jobs to be done within the rostered shift hours. A nine hour shift may for example have comprised working one load from A to B then taking a second load from B to C then returning to his home depot on a passenger train from C to A. A to B could be scheduled for 4 hours, load B to C scheduled for 3 hours, allowing 2 hours to get back to A. The whole shift would be rostered as 9 hours (including 1 hour of overtime) providing 7 hours of productive work from BR’s perspective. Additionally if the rostered jobs could be completed within the allocated time, then the driver could ‘unofficially’ go home early, having completed his rostered jobs.
The shift could work jobs across several regions with each region being run by regional controllers who were responsible for scheduling loads and any load could cross several regions. The Docket Clerk on duty at each locomotive depot was responsible for allocating crews and locomotives. Allocation would require a Driver to have learnt that route and ‘sign’ as competent, also having passed out by a course and examination on that particular locomotive assigned to the load. Given a national network, it was quite a complex freight operation with loads moving up and down and across country; in the days when the UK and the North East of England in particular used to make things that needed to be moved by rail. Loads could be delayed due to technical failures, a no-show driver or a delayed crew, delays with loads being made available from their start-point, a part-load not delivered to be joined up or a host of other reasons; all combining to make the scheduling difficult and timings highly moveable. All this was seen by my father as an opportunity for him to reach local agreement with those in a position to do so.
He would drive load A to B and load B to C, but having developed a reputation with the Docket Clerks as a man who could be depended upon to be helpful, he could be contacted by a Regional Controller at C on the advice of the Docket Clerk back at his own depot. The RC would find himself with a load at C ready to go to D but no driver. Asking whether my father knew the route and invariably my father answering yes, the RC would ask if my father could do him a favour and take this load to D instead of travelling back to his base depot as a passenger. Load C to D was scheduled for 3 hours and he could then get a passenger train back from D to get him back to A. The RC would commit to paying my father for the extra 3 hours. Now it became a shift of 12 paid hours including 4 hours of overtime, and BR would get 10 hours of productive driving. The RC would contact the Docket Clerk back at his base depot and credit my father with 3 hours of overtime. BR got their train moved in its designated time-slot instead of having it delayed with the consequent increased complications of deferring and re-scheduling the movement and potentially dissatisfied customers. If he was lucky my father would also find a load at D to go back to A and so instead of 2 hours of travelling as a passenger, he may also get another 2 hours of overtime and BR get another productive job done. All in all, perhaps paid 14 hours for 12 hours of productivity and BR getting the job done instead of two freight loads sitting somewhere they shouldn’t haven’t been sitting.
Also, jobs rarely took as long as they were scheduled to take if you had your wits about you and that certainly didn’t mean exceeding the load speed or being unsafe. My father was a very good Driver; his 45 years of service were exemplary. He became expert at getting all these jobs done in way less than their allocated time. He could get paid for 12 hours and sometimes complete all of the jobs in less time than his rostered shift length of 8 or 9 hours. BR got even more efficiency. My father was the answer to the prayers of many a Regional Controller. He would put himself out to help knowing that he would be looked after by the Regional Controllers and the Docket Clerks. As for BR, many a load got to its destination within its schedule when otherwise it wouldn’t. Other drivers would be within the rules to refuse to wait for their load if it meant they would have to exceed their scheduled hours. A complex set of circumstances could mean at the time the load was ready to be moved, that no driver was available who had passed out as qualified on that particular locomotive or on that particular route, because the scheduled drivers previous job had been seriously delayed. My father took every opportunity to learn and qualify on both locomotives and routes. Occasionally he earned so many hours in a single shift, the Docket Clerk had to put a few in the back of the book to be paid at a later date to avoid highlighting what had happened. On occasion my father would do the job even when it wasn’t particularly convenient for him to do so, getting home a lot later than my mother expected and perhaps spoiling ‘plans’. That was part of the deal as my father saw it.
Was money the motivator? Well, financial security and better choices for his family was definitely a reason for my father. He also saw the opportunity to add to his occupational pension scheme pot for his long term future. However, he had turned down a much better paid job hadn’t he, so money was certainly not his only driver. He had allowed BR to relocate him and his family following a depot closure, when he could have easily changed jobs without moving home and the enduring the upheaval to domestic life. So whilst money was important for good reason, it wasn’t the whole picture. True, BR offered my father job security. His years of service gave him seniority. It was part of the balanced rationale in my fathers’ decision making.
That lengthy anecdote goes to build my case that perhaps even for an ordinary working man; and my father has no objection to that term, for that is how he saw himself; money per se may clearly not be a motivator. It is a hygiene factor and only part of the picture. That doesn’t mean to say that financial reward is wrong, but it needs to fit within a bigger picture.
This all brings me to the present. If you need a break at this point, go make yourself a cup of coffee or something. We still have some ground to cover!
I have recently been reading the work of Daniel Pink and his words strike a chord with me. However, he very much argues that reward linked to performance can actually have the opposite effect to its intentions and presents strong argument based on science, as he puts it. He recognises that money can be an issue at work but his take on it is that it is only an issue if pay is not perceived to be fair. It is a relative fairness. In other words its fairness is adjudged when taken into wider context, such as what others are paid, internally and externally in the market, amongst other things. He also discusses how rewarding performance actually undermines the creative process and he points to organisations where creativity explodes into life when the shackles of compliance are taken off.
Daniel Pink talks of three intrinsic factors to motivation – autonomy, mastery and purpose. Autonomy, naturally enough, is taken to be the extent of self-direction, the relative lack of supervision and control. Mastery is that drive to be good at one’s job and for continuous improvement. I can personally see that as pride in one’s workmanship. Purpose is that reason, something we work towards, a strong reason for being. I get it and I can agree with him, but ….. I find that I am still not willing to totally cast aside my beliefs in performance and reward. Here I have to be careful as I have been clinging to this work principle for many years now, so it may just be a habit that is hard to break.
How do we, if indeed we can, reconcile paying for performance with the concept that money is not a motivator. Perhaps it is no motivator, particularly if money is not an issue. If you perceive yourself to be underpaid, then it is naturally an issue to you. Perhaps the prevalence of people who genuinely consider themselves underpaid or perhaps more realistically are actually low paid within the economy are also less likely to see themselves as, and actually are less likely to be, holding down jobs which afford them little opportunity for autonomy, mastery and purpose. Perhaps an ability to influence their pay level is as near as some get to autonomy.
Perhaps there is a reality that lies in both propositions having real applicability. Where the job increasingly provides financial security, then increasingly financial reward loses its meaning and also its ‘motivational’ appeal. Except that it is not truly a motivator. It is more of a stick than a carrot and increasingly so where that earnings potential makes the difference in lifestyle that elevates a family lifestyle from getting by to being comfortable. Maslow’s hierarchy of needs anyone?
I suggest that there is also explanation to be found in comparison of the characteristics of Generations X and Y. Many of Generation X were brought up and started their working lives in the days of manufacturing and production. Output based reward schemes are linked to compliance, and manufacturing and production are very much process driven and based around compliance. Perhaps it is something to do with manufacturing and production being populated with jobs that are less typified by autonomy, mastery and purpose, and more typified by control and direction, driven by structured process and repetitive task, and more of a small cog in a large wheeled corporate machine. How many tens of people does Ford or General Motors employ to be creative in designing a car; and how many do they employ to build thousands of units of that car?
The types of organisation that Daniel Pink acknowledges is his evidence in favour of an absence of reward schemes are populated by creative types. Such organisations competitive edge is based on technological leaps and not intensive labour, and I would suggest are largely populated by Generation Y employees. Job insecurity is not a common thought amongst Apple or Google employees but has lived with Ford and GM employees for many years now. What are the age demographics of Apple or Google compared to Ford or GM? Very likely a 15 year or more difference in the averages I would bet. What are the salary levels and distribution like in both types of company? How many years is an IPod on the market before it is replaced by its next generation, compared to the timings between each successive model of Ford Mondeo?
The answer lies before us in rational explanation, not in an argument for one extreme stance or the other. Perhaps we can draw a reasonable inference that performance related pay will become increasingly less reliable as any means of increasing individual performance as the general aspirations of individuals change. As the nature of work continues to shift from production worker beyond knowledge worker to creative worker, organisations will need to focus on motivation of such workers to continue to drive their business and that motivation will probably not be found in a KPI based reward arrangement. For traditional relatively low paid production workers, for as long as such jobs exist, where compliance is a key driver of the role then KPI driven reward may still have some relevance, but let us not overestimate its influence as I think we have done throughout my working life.
People are different and complex, let us not forget it. One size does not fit all, and it never has.