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Ah, brilliant post. The what you reward vs. what you don't reward is a very critical point to understand. You must positively reinforce employees only for those actions that reflect the company values while achieving the strategic objectives. This approach ensures employees who, for example, increase productivity but do so by harming the environment will not be rewarded for their efforts. Values-based recognition is the key to ensuring employees display the right behaviors in achieving the company goals.

For more on how not to reinforce deviant behavior and research on the topic: http://globoforce.blogspot.com/2009/07/self-esteem-sabotage-and-psychic-income.html

Ah, thank you for the great article. I think its great, because you've articulated precisely what's been niggling at my growing discomfort with "pay for performance." In theory, PFP makes all the logical sense in the world. But its application is much more problematic!

The last bullet point, "What you reward v. what you DON'T reward" can also be viewed by employees as 'what they've told us v. what they haven't told us'
...that my solid performance is devalued,
...that we're 'not' in this all together,
...and that individual results trump corporate results, after all.

Every action has a reaction, and I fear a predictable (negative) reaction in engagement as the market continues to shift from the 'buyers' (employers) to a 'sellers' market.

Derek and Shawn thank you for weighing in with these great insights!

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