1. ON THE FOLLY REWARDING A WHILE HOPING FOR B
Author: Steven Kerr
Presented by: Robert Montalvan

2. Steven Kerr PhD, City University of New York
Goldman Sachs, Chief Learning Officer
General Electric – Crotonville, Vice-president of Corporate Leadership Development
The Ohio State University, Associate Professor of Organizational Behavior
University of Michigan
University of Southern California, Dean & Director of PhD program

3. “Managers who complain about lack of motivation of 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”
Steven Kerr
Academy of Management
Executive, 9(I), 1995

4. Goal displacement:
“Goal displacement results when means become ends-in-themselves that displace the original goals”

5. EXAMPLES OF Goal displacement (1):
Assume that the president of XYZ Corporation is confronted with the following alternatives:
Spend $11 million for antipollution equipment to keep from poisoning fish in the river adjacent to the plant; or
Do nothing, in violation of the law, and assume a one in ten chance of being caught, with a resultant $1 million fine plus the necessity of buying the equipment

6. EXAMPLES OF Goal displacement (2):
World Bank claims repeatedly that its main goal is to fight poverty in the Third World.
But in reality, to stay in office the World Bank must lend a great deal of money (23 billion) with no cheap interest

7. EXAMPLES OF Goal displacement (3):
A Texas public school district have “cheated” by liberally exempt certain students to take standardized tests on the hope of raising overall district pass rates.
John Bohte, Oakland University
Kenneth Mier, Texas A&M University

8. Common management reward follies (1):
Hoping for:
while rewarding:
Politician addressing operative goals
politician involved in official goals
A soldier to obey orders
soldier’s disobedience
Doctors will not incur in type 1 error (labeling a well person sick)
Type 1 errors (seen as normal in medical practice, increased income), i.e Tuberculosis diagnosis ratio of 50:1
Orphanages goal’s: place children in good homes
Not giving children away (staff size and budget depend on number of children)
Vocational Rehabilitation: help individuals to find permanents jobs
Pays off number of individuals placed for only 60 days
Source: Steven Kerr

9. Common management reward follies (2):
Hoping for:
while rewarding:
Teacher not neglect teaching responsibilities
Research and publications
Transfer knowledge from teacher to student reflected in grades
grades are much more important than knowledge
Companies not pollute environment
Managers that avoid anti-pollution additional measures or expenses
To evaluate training efforts in companies
Ignorance in this area (the ones responsible for conduct evaluations are the same ones that deliver the training)
Long-run costs
Short-run sales and earnings only
Source: Steven Kerr

10. Common management reward follies (3):
Hoping for:
while rewarding:
Team work and collaboration, (all-for-one spirit)
the best team members (advertising endorsements)
Innovative thinking and risk taking
Proven methods and not making mistakes
Development of people skills
Technical achievements and accomplishments
Employee involvement and empowerment
Tight control over operations and resources
High achievement
Another year’s effort
Government expects prudence on agencies’ spending
spending itself, not economy (cut back on not used funds for following year).
Source: US Academy
of Management

11. CAUSES OF FAULTY SYSTEMS:
Fascination with “objective” criterion
Overemphasis on highly visible behaviors
Hypocrisy
Emphasis on morality or equity rather than efficiency

12. Performance Systems: Mark Graham Brown (1996)
“The most common mistake organizations make is measuring too many variables. The next most common mistake is measuring too few”

13. Pitfalls of measuring systems (1):
Amassing too much data
Focusing on short-term
Failing to base business decisions on the data
Dumbing the data
Measuring too little
Collecting inconsistent, conflicting and unnecessary data
Driving the wrong performance

14. Pitfalls of measuring systems (2):
Encouraging competition and discouraging team work
Establishing unrealistic and/or unreasonable measures
Failing to link measures
Measuring progress too often or not often enough
Ignoring the customer
Asking the wrong question / looking in the wrong place
Confusing the purpose of the performance management system

15. Performance management systems:
High-involvement management is suppose to:
Develop skills in employees
Reinforce good performance
Provide feedback
Follow-up on unacceptable performance

16. Social Reinforcement Theory
Social behavior results from situations and encounters that are either rewarded or punished as an individual matures from childhood to adulthood

17. Causes of follies:
An inability to break out old ways of thinking about reward practices
Lack of an overall system of performance factors and results
Continuing focus on short term results by management and shareholders
Partnering something in which we do not wholly believe

18. TYPES OF REWARDS:
Extrinsic rewards: pay, promotion or fringe benefits. These rewards are mainly cash
Intrinsic rewards: are part of he job itself. The responsibility, challenge and feedback characteristics of the job. Such rewards (non-cash) are more effective motivators

19. Hypothesized model of organizational commitment (Richards Steers – University of Oregon) :
PERSONAL CHARASTERISTICS
(need for achievement, age, education)
OUTCOMES
desire to remain
intent to remain
Attendance
employee retention
job performance
JOB CHARASTERISTICS
(task identity, optional interaction, feedback)
ORGANIZATIONAL COMMITEMENT
WORK EXPERIENCES
(group attitudes, organizational dependability, personal import)

20. Common errors on performance management (1):
Similar to me
Positive leniency: want to give everyone higher scores
Negative leniency: want to give everyone lower scores
Halo effect: the employee is a “saint” so must have higher scores
Attribution: tending to see poor performance as more of an influence of external factors
Stereotyping

21. Common errors on performance management (2):
Contrast effect: contrasting one employee’s accomplishments against another
First impression
Central tendency: forced bell curve (expecting in any group that there will be some poor employees and some great employees)
Recent effect: over emphasis on recent performance
Negative approach: catching them doing something wrong instead of catching them doing something right
(Ohio University Performance Management System guidelines)

22. Manager/subordinate divergent goals and motives:
Possible remedies:
Selection of individuals that are consonant with the organization’s goals
Training to alter those personal goals
Altering the reward system

23. Advise:
Next time that you are not getting the results that you want in your business, seriously evaluate what are you rewarding. You cannot get what you want until you stop “hoping for A while rewarding B”

24. Bibliography:
Brayfield, Arthur & Crokett: Employee Attitudes and Employee Performance, Psychological Bulletin. 52(5), 1955
Bohte, John & Mier, Kenneth. Goal Displacement: Assesing the Motivation for Organizational Cheating. American Society for Public Administration,
Department of Energy: Performance Management Handbook, 2001
Kerr, Steven: On the folly rewarding A, while hoping for B. Academy of Management Journal 18(4), 1975 <Original version>
Lawler, Edward: Rewarding Excellence
Steers, Richard: Antecedents and Outcomes of Organizational Commitment, Administrative Science Quarterly, 1977