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Ancient Managerial Grid parlance distinguished between "5-5" country-club style managers who curry popularity while ducking conflict and "9-9" leaders who balance group spirit and enterprise goal achievement. There are some recent academic studies revisiting the subject, with disturbing implications attributed to the new Cornell/NYU research. Some articles are appearing saying that since popularity with subordinates leads to more "felt-fair" perceptions that enhance engagement, bosses should avoid disturbing ees by confronting them with uncomfortable truths about output realities. Academics seem to be advocating the very same "peanut butter" approach you are condemning.

Personally, I agree with you. Despite ivory-tower theorizing about "fairness" (whatever THAT means), organizations do not exist for the satisfaction and pleasure of their employees but are founded on purposes that require real performance.

I'm wondering if this new research is not somehow being influenced by the whole employee engagement movement which could be construed as "keep 'em happy, keep 'em from leaving".


It is an interesting premise. I would like to put here an aterantive point of view or explanation to the premise of your article and the follow up comments to date.

Personally I don't buy into the need to differentiate on performance quite as strongly as the article indicates. That said I know there is a word limit on articles, so perhaps I am just addressing the other side of the same coin.

A significant reason managers may choose to be more egalitarian in their reward spend and less discriminating around 'performance' is at times down to their own ineptitude at measuring and managing 'performance' in the 1st place. But is it the manager's 'ineptitude' or is it that in many areas of work where we run MBO style performance management, managers lack the conviction that they can fairly and accurately measure individual performance? Certainly that was Edward Deming's PoV and as a statistician and management practitioner with considerable success, he was able to back such doubts. Even Peter Drucker has come to this view in more recent times.

The reality in performance pay at the level of the individual is that extreme outliers (your true non performers and your true top performers) are relatively easy to identify and in my experience most managers make the connection between the performance of these 'outliers' and reward and in the case of the true ‘non-performers’ employment outcomes. Its the remaining 90% + that is much more problematic. The manager may look at results and question the authenticity of the original performance objectives (that they themselves set perhaps a year ago), the level of support they provided, the level of real control and sphere of influence the individual really had over the performance outcomes and the multitude of reasons as to why that 90% appear to have differing degrees of performance outcomes. In this scenario such a manager may choose to take the approach of having dealt with the extreme and clear top and bottom 'outliers' they can see little reason to significantly differentiate on the remaining 90%, ie they lack a clear and obvious reason for doing so that they can attribute to any one individual.

While most of Deming's work was in the manufacturing setting the thinking about collective performance and the noise in the system remains very relevent in my view, in today's more service orientated work as well as manufacturing. Senge's work on learning organisations and systems thinking all point to valid reasons why we see many managers not choosing to differentiate based on individual performance results. Do those managers realise that? Probably not, but far from being 'ivory tower' thinking I would say both the research and practice does set out a very different and plausable approach to individual performance pay, which has perhaps had its day in many organisations.

What do you think?

David: Drucker was clever enough to stay completely out of the arguments about HOW to implement MBO, leaving such bloody practical battles to successors like George Odiorne and others. Having a great idea doesn't automatically imply that it is easy to implement. Quite the opposite: frequently there is an inverse relationship, where the best are hardest and the worst are easiest. Like the negative situations discussed above, where managers refuse to differentiate despite their ability to do so or where supervisors are not given the proper tools. It's a Mager/Pipe Performance Problem Analysis thing, responsive to their classic model.

Agree with you that where sufficient justification or resources for differention is lacking, treating them the same is fine. Thus my long mantra that the best categories are Super, OK and Lousy, due to the overwhelmingly high rater reliability statistics of such outlier identifications, leaving the vast middle for nominal treatment.

Believe Chuck was focusing on the craven managers who eschew valid P4P schemes in favor of the peanut-butter approach that makes no enemies by disappointing virtually everyone.

I agree with David. I believe far more harm is done by those who think they can separate out the individual contributions from the system than the other way around.

One place that makes it visible how hard this is to do is sports. Huge amounts of resources are spent trying to determine what the value of some basketball (or other sport) player is - and they often get it very wrong. IN nearly every company the amount of effort put into evaluating what some individuals contribution is doesn't amount to 2% of what is put into evaluating athletes. The evidence of how poorly evaluating athletes is done is a visible example of how poor we are at getting accurate assessments of an individual contribution that is special versus the system.

A very sophisticated understanding of systems thinking, the system in play, understanding variation as well as human system is required to even theoretically focus on rewarding individuals more. The attempts to do are a waste (and cause many problems). We should focus on doing a better job managing the system not trying to make outdated incentive payments more important.

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