1. On the folly of rewarding A, while hoping for B
Food for thought
On the folly of rewarding A, while hoping for B
Managers who complain about lack of motivation in their workers might do well to consider the possibility that the reward systems they have installed are paying off for behavior other than what they are seeking…and this is what regularly frustrates societal efforts to bring about honest politicians and civic-minded managers.
—Steven Kerr (AME, 1995, p.13)

2. Session 3 Managing Change at the Individual Level

3. Topics for Today
Recap
Theme 1: individuals as agents and recipients of change.
Case study: John Smithers.
Discussion: your own experience in a change process.
Theme 2: The role of incentives for individual behavior.
Debate: Extrinsic or intrinsic motivation?
Summary and takeaways

4. 5 targets in managing change in a loosely coupled system
Sources Solution Strategy
Presumptions of logic Doubt produces change Attention management
Socialization processes Re-socialization produces Training programs
change
Differential participation Equalization produces Decision structure
rates change
Constant variables that Distraction produces Organizational slack
disconnect units change
Corruption of feedback Dependability produces Consultant, persistent
loops change expert sources

5. The Paradox of strategies: Exploration versus exploitation March 1991
“Exploitation” or “exploration:” The strategic choice
Examples
IBM in the 1980s: PC or Mainframe?
3M: competing through new niche or existing markets?
The trade-off between the two strategies
“Exploitation”: the temptation
Political
Cultural
The need for strategic vision—the trade-off
Reinterpreting 3M and Motorola

6. Theme 1. Individuals as agents and recipients of change
Changes start and end with individuals
As strategists
As implementers
As recipients
Need to understand the role of individuals in the change process
The case of John Smithers
Some observations
The Silicon Valley phenomenon
Sun Hydraulics
Six Sigma Quality Program in Citibank
Questions:
What motivates individuals to behave this or that way?
What do you think John Smithers’ role in the change process?

7. Case Study: John Smithers

8. Organizational chart at Sigtek

9. The Context of Change The environment Organizational structure
Economic recession
Market competition
Changes in parent company (Telwork)
Need for change
Organizational structure
Tensions between engineering and operation
Organizational culture
Different managerial styles across departments
The introduction of the change program (TQM)

10. Background: Total Quality Management
Customer focus
Emphasis on continuous improvement
Problem solving processes with extensive tracking, measurement
Empowerment
Create fit between the social and the technical system
Focus on crossover or hand-offs.
Benchmarking, comparing with norms
Ownership across boundaries of output

11. John Smithers Describe the approach to change at Sigtek
What was the situation Smithers faced in this assignment?
barriers to change
drivers to change
Was Smithers effective?
implementation steps
why did things get wrong?
What should he have done differently?
What are the future prospects for this quality control initiative? Can TQM be revived?

12. Consider Sigtek’s chronology of events
April: Smithers receives assignment; paired with enemy Murphy
May-June: Murphy and Smithers (S/M) get 3 week TQM training
July: Senior managers attended 2 day seminar
August: S/M meet with TQM Team; Patricof denies one week teaching delay
September: 25 employees trained [excitement]; follow-up action [frustration];accounting rejects S’ charge back
October: Training continues
November: Request temporary recoup break denied; Patricof promoted
December: Smithers asked to be relieved

13. Change at Sigtek Barriers Drivers: interdepartmental conflicts
philosophical differences with partner Murphy and Patricof
Inflated employee expectations
Cultural resistance to change
Imposed, dogmatic program
Distraction of business demands
Smithers’ own “regular assignment
Drivers:
Opportunity to build bridges and integrate multiple businesses
Pent-up needs/problems
Need to break old habits
Excited, participative manager
Highly acclaimed program; widely known
Opportunity to save the business

14. Analysis from the three lenses

15. The lens of Strategic design
Strategic issues:
Timing of change
Top-down or bottom-up
Incremental or quantum changes?
A systematic program for change?
Alignments between personnel, incentives, structures
Identifying problems in training program  resolved at the workfloor.
Mismatch between the parent company and Sigtek in the change program.

16. The Political Lens Tensions between engineering and operation groups
The failure of building a political coalition
Support from top managers?
Competition of interests and resources
Multitasking
Attention allocation
Different interests versus a common cause for change?
Managers use the six sigma quality program to pursue their own agenda.
Why didn’t Patricof allow a break in the training process?

17. The cultural lens Empowerment as the key to TQM
Autocratic, unresponsive to workers’ feedbacks
Ill fitted for the Six Sigma Quality Program
More on “culture” in the next session

18. Involving the whole organization for change
Three change constituencies:
strategists (declare the need for change, but no support or direction)
the implementers (mandate a new way of doing without considering internal customers’ needs)
the recipients (meeting felt needs)
Sigtek problems:
limited parent support; Patricof negative talking the talk
Smithers’ self-righteousness and lack of EI alienates internal customers
the recipients’ needs are disregarded, not aired

19. Takeaways for Smithers
Have emotional intelligence to “register” resistance to change and coopt adversaries. Do not dig your own (TQM) grave.
Use group composition to build bridges between engineering-operation department.
Develop some small successes; Take some measurements. Grab the power that comes with empowerment!
Build political capital; manage Patricof and Bradley, even Telwork.

20. Take aways for Telwork
Signal support for TQM. Identify strategists, implementers and recipients
Provide milestones and other support
Empower people by giving them a sense of ownership
Create incentives for TQM team. Create customer awareness
Need to motivate change agents, need to understand their aspirations, goals, and needs.
Need a systematic change program: timing—layoffs, cutbacks, etc.

21. Theme 2: On Motivating People
Management is about managing people
The mission of business school training
The cases of Silicon Valley and Morgan Stanley
Is incentive an indispensable managerial tool?
What is incentive?
Do people respond to incentives?
The folly of rewarding A, while hoping for B
What kinds of incentives?
Incentive pay or intrinsic motivation?
Individual-based or collective-based
Short-term based or long-term based?
Types of jobs (professional versus nonprofessional)

22. Debate: Extrinsic or Intrinsic Motivation?

23. Extrinsic motivation For Against (Kohn):
The bottom line: economic rewards have to be competitive
Economic rewards are indicators of achievement and status
Incentive pay (to induce higher level of efforts)
Labor costs versus labor investment.
Against (Kohn):
Induces only temporary compliance.
Pay is not a motivator.
Rewards punish.
Rewards rupture relationships.
Rewards ignore reasons.
Rewards discourage risk-taking.
Rewards undermine interest.

24. Intrinsic Motivation For: Against (?): The Hawthorn experiment;
Individuals enjoy work, collective activities;
Individuals respond to peer pressures, social comparison;
Socialization, professional training shape behaviors;
Against (?):
To what extent?
Under what conditions?

25. In general, the more cognitive sophistication and open-ended thinking that was required, the worse people performed when working for a reward.
— Aflie Kohn (2000, p. 55)

26. Summary and takeaways Motivation and incentive matter.
Incentives take different forms
Financial, social recognition
Individual-based, collective-based
Short-term, long-term
Motivations vary with—
Work environments
Different types of career lines
Stages in the life course
A key managerial task is to figure out what motivates your employees and design your ‘incentive plan’ accordingly.